10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38289AVAYA HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Delaware	26-1119726
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4655 Great America Parkway Santa Clara, California	95054
(Address of Principal executive offices)	(Zip Code)

(908) 953-6000

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AVYA	New York Stock Exchange ("NYSE")

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller Reporting Company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨   No  ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ý    No  ¨

As of July 31, 2019, 111,016,298 shares of Common Stock, $.01 par value, of the registrant were outstanding.

TABLE OF CONTENTS

Item	Description	Page
	PART I—FINANCIAL INFORMATION
1.	Financial Statements	1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
3.	Quantitative and Qualitative Disclosures About Market Risk	54
4.	Controls and Procedures	55
	PART II—OTHER INFORMATION
1.	Legal Proceedings	57
1A.	Risk Factors	57
2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
3.	Defaults Upon Senior Securities	57
4.	Mine Safety Disclosures	57
5.	Other Information	57
6.	Exhibits	58
	Signatures	59

When we use the terms "we," "us," "our," "Avaya" or the "Company," we mean Avaya Holdings Corp., a Delaware corporation, and its consolidated subsidiaries taken as a whole, unless the context otherwise indicates.

This Quarterly Report on Form 10-Q contains the registered and unregistered trademarks or service marks of Avaya and are the property of Avaya Holdings Corp. and/or its affiliates. This Quarterly Report on Form 10-Q also contains additional trade names, trademarks or service marks belonging to us and to other companies. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Avaya Holdings Corp.

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)

	Successor												Predecessor
	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
REVENUE
Products	$	297		$	300		$	908		$	664		$	253
Services	420			392			1,256			848			351
	717			692			2,164			1,512			604
COSTS
Products:
Costs	109			114			329			257			84
Amortization of technology intangible assets	43			44			130			92			3
Services	175			182			522			410			155
	327			340			981			759			242
GROSS PROFIT	390			352			1,183			753			362
OPERATING EXPENSES
Selling, general and administrative	253			281			761			613			264
Research and development	49			51			154			110			38
Amortization of intangible assets	41			39			122			86			10
Impairment charges	659			—			659			—			—
Restructuring charges, net	1			30			12			80			14
	1,003			401			1,708			889			326
OPERATING (LOSS) INCOME	(613		)	(49		)	(525		)	(136		)	36
Interest expense	(59		)	(56		)	(177		)	(112		)	(14		)
Other income (expense), net	12			37			35			32			(2		)
Reorganization items, net	—			—			—			—			3,416
(LOSS) INCOME BEFORE INCOME TAXES	(660		)	(68		)	(667		)	(216		)	3,436
Benefit from (provision for) income taxes	27			(20		)	30			235			(459		)
NET (LOSS) INCOME	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977
(LOSS) EARNINGS PER SHARE
Basic	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
Diluted	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
Weighted average shares outstanding
Basic	111.0			109.8			110.7			109.8			497.3
Diluted	111.0			109.8			110.7			111.0			497.3

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

1

Avaya Holdings Corp.

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

(In millions)

	Successor												Predecessor
	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
Net (loss) income	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977
Other comprehensive (loss) income:
Pension, post-retirement and postemployment benefit-related items, net of income taxes of $2 for the three and nine months ended June 30, 2019; and $(58) for the period from October 1, 2017 through December 15, 2017	(6		)	—			(6		)	—			655
Cumulative translation adjustment	(10		)	(4		)	9			(29		)	3
Change in interest rate swaps, net of income taxes of $7 and $18 for the three and nine months ended June 30, 2019; and $3 for the three months ended June 30, 2018 and the period from December 16, 2017 through June 30, 2018	(22		)	(12		)	(53		)	(12		)	—
Other comprehensive (loss) income	(38		)	(16		)	(50		)	(41		)	658
Elimination of Predecessor Company accumulated other comprehensive loss	—			—			—			—			790
Total comprehensive (loss) income	$	(671	)	$	(104	)	$	(687	)	$	(22	)	$	4,425

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2

Avaya Holdings Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share and share amounts)

	June 30, 2019			September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	729		$	700
Accounts receivable, net	276			377
Inventory	71			81
Contract assets	178			—
Contract costs	128			—
Other current assets	149			170
TOTAL CURRENT ASSETS	1,531			1,328
Property, plant and equipment, net	243			250
Deferred income taxes, net	25			29
Intangible assets, net	2,978			3,234
Goodwill, net	2,105			2,764
Other assets	109			74
TOTAL ASSETS	$	6,991		$	7,679
LIABILITIES
Current liabilities:
Debt maturing within one year	$	29		$	29
Accounts payable	292			266
Payroll and benefit obligations	126			145
Contract liabilities	470			484
Business restructuring reserve	36			51
Other current liabilities	130			148
TOTAL CURRENT LIABILITIES	1,083			1,123
Non-current liabilities:
Long-term debt, net of current portion	3,091			3,097
Pension obligations	619			671
Other post-retirement obligations	181			176
Deferred income taxes, net	120			140
Business restructuring reserve	37			47
Other liabilities	390			374
TOTAL NON-CURRENT LIABILITIES	4,438			4,505
TOTAL LIABILITIES	5,521			5,628
Commitments and contingencies (Note 19)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at June 30, 2019 and September 30, 2018	—			—
Common stock, $0.01 par value; 550,000,000 shares authorized; 110,887,967 shares issued and 110,875,287 shares outstanding at June 30, 2019; and 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018	1			1
Additional paid-in capital	1,756			1,745
(Accumulated deficit) retained earnings	(255		)	287
Accumulated other comprehensive (loss) income	(32		)	18
TOTAL STOCKHOLDERS' EQUITY	1,470			2,051
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,991		$	7,679

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

3

Avaya Holdings Corp.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)

(In millions)

	Common Stock				Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Shares		Par Value
Balance as of September 30, 2018 (Successor)	110.2		$	1	$	1,745		$	287		$	18		$	2,051
Issuance of common stock under the equity incentive plan	0.8													—
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(0.3	)			(6		)							(6		)
Share-based compensation expense					6									6
Adjustment for adoption of new accounting standard (Note 2)								92						92
Net income								9						9
Other comprehensive loss											(20		)	(20		)
Balance as of December 31, 2018 (Successor)	110.7		1		1,745			388			(2		)	2,132
Share-based compensation expense					5									5
Adjustment for adoption of new accounting standard (Note 2)								3						3
Net loss								(13		)				(13		)
Other comprehensive income											8			8
Balance as of March 31, 2019 (Successor)	110.7		1		1,750			378			6			2,135
Issuance of common stock under the equity incentive plan	0.3													—
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(0.1	)			(2		)							(2		)
Share-based compensation expense					8									8
Net loss								(633		)				(633		)
Other comprehensive loss											(38		)	(38		)
Balance as of June 30, 2019 (Successor)	110.9		$	1	$	1,756		$	(255	)	$	(32	)	$	1,470

	Common Stock				Additional Paid-In Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Total Stockholders' (Deficit) Equity
	Shares		Par Value
Balance as of September 30, 2017 (Predecessor)	494.8		$	—	$	2,389		$	(5,954	)	$	(1,448	)	$	(5,013	)
Share-based compensation expense					3									3
Accrued dividends on Series A preferred stock					(2		)							(2		)
Accrued dividends on Series B preferred stock					(4		)							(4		)
Reclassifications to equity awards on redeemable shares					1									1
Net income								2,977						2,977
Other comprehensive income											658			658
Balance as of December 15, 2017 (Predecessor)	494.8		$	—	$	2,387		$	(2,977	)	$	(790	)	$	(1,380	)
Cancellation of Predecessor equity	(494.8	)	—		(2,387		)	2,977			790			1,380
Balance as of December 15, 2017 (Predecessor)	—		$	—	$	—		$	—		$	—		$	—
Balance as of December 15, 2017 (Predecessor)	—		$	—	$	—		$	—		$	—		$	—
Common stock issued for settlement of Predecessor debt	103.9		1		1,575									1,576
Common stock issued for Pension Benefit Guaranty Corp.	6.1				92									92
Balance as of December 15, 2017 (Predecessor)	110.0		$	1	$	1,667		$	—		$	—		$	1,668
Balance as of December 16, 2017 (Successor)	110.0		$	1	$	1,667		$	—		$	—		$	1,668
Share-based compensation expense					1									1
Net income								237						237
Other comprehensive loss											(13		)	(13		)
Balance as of December 31, 2017 (Successor)	110.0		1		1,668			237			(13		)	1,893
Share-based compensation expense					5									5
Net loss								(130		)				(130		)
Other comprehensive loss											(12		)	(12		)
Balance as of March 31, 2018 (Successor)	110.0		$	1	$	1,673		$	107		$	(25	)	$	1,756
Issuance of common stock under the equity incentive plan	0.2													—
Shares repurchased and retired for tax withholding on vesting of restricted stock units					(2		)							(2		)
Equity component of convertible notes, net of issuance costs and income taxes					67									67
Purchase of convertible note bond hedge, net of income taxes					(64		)							(64		)
Issuance of call spread warrants					58									58
Share-based compensation expense					7									7
Net loss								(88		)				(88		)
Other comprehensive loss											(16		)	(16		)
Balance as of June 30, 2018 (Successor)	110.2		$	1	$	1,739		$	19		$	(41	)	$	1,718

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

4

Avaya Holdings Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

	Successor						Predecessor
	Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
OPERATING ACTIVITIES:
Net (loss) income	$	(637	)	$	19		$	2,977
Adjustments to reconcile net (loss) income to net cash provided by (used for) operating activities:
Depreciation and amortization	335			264			31
Share-based compensation	19			13			—
Amortization of debt issuance costs	12			1			—
Accretion of debt discount	4			2			—
Deferred income taxes, net	(27		)	(207		)	455
Impairment charges	659			—			—
Change in fair value of emergence date warrants	(28		)	9			—
Unrealized loss (gain) on foreign currency transactions	9			(33		)	—
Other non-cash charges, net	7			3			—
Reorganization items:
Net gain on settlement of Liabilities subject to compromise	—			—			(1,778		)
Payment to Pension Benefit Guaranty Corporation	—			—			(340		)
Payment to pension trust	—			—			(49		)
Payment of unsecured claims	—			—			(58		)
Fresh start adjustments, net	—			—			(1,697		)
Non-cash and financing related reorganization items, net	—			—			26
Changes in operating assets and liabilities:
Accounts receivable	100			23			40
Inventory	(14		)	24			(2		)
Contract assets	(99		)	—			—
Contract costs	(26		)	—			—
Accounts payable	27			42			(40		)
Payroll and benefit obligations	(66		)	(73		)	16
Business restructuring reserve	(23		)	39			(7		)
Contract liabilities	26			149			28
Other assets and liabilities	(103		)	(98		)	(16		)
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	175			177			(414		)
INVESTING ACTIVITIES:
Capital expenditures	(84		)	(36		)	(13		)
Acquisition of businesses, net of cash acquired	—			(157		)	—
Strategic investments	(10		)	—			—
Other investing activities, net	(1		)	1			—
NET CASH USED FOR INVESTING ACTIVITIES	(95		)	(192		)	(13		)
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement	—			—			2,896
Repayment of debtor-in-possession financing	—			—			(725		)
Repayment of first lien debt	—			—			(2,061		)
Repayment of Term Loan Credit Agreement due to refinancing	—			(2,918		)	—
Proceeds from Term Loan Credit Agreement due to refinancing	—			2,911			—
Proceeds from issuance of convertible notes	—			350			—
Proceeds from issuance of call spread warrants	—			58			—
Purchase of convertible note bond hedge	—			(84		)	—
Repayment of long-term debt, including adequate protection payments	(22		)	(15		)	(111		)
Debt issuance costs	—			(10		)	(97		)
Payment of acquisition-related contingent consideration	(9		)	—			—
Payments related to sale-leaseback transactions	(10		)	(7		)	(4		)
Other financing activities, net	(10		)	(1		)	—
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(51		)	284			(102		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	1			(5		)	(2		)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	30			264			(531		)
Cash, cash equivalents, and restricted cash at beginning of period	704			435			966
Cash, cash equivalents, and restricted cash at end of period	$	734		$	699		$	435

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

5

Avaya Holdings Corp.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Background and Basis of Presentation

Background

Avaya Holdings Corp. (the "Parent" or "Avaya Holdings"), together with its consolidated subsidiaries (collectively, the "Company" or "Avaya"), is a global leader in digital communications products, solutions and services for businesses of all sizes. Avaya builds open, converged and innovative solutions to enhance and simplify communications and collaboration in the cloud, on-premises or a hybrid of both. The Company's global team of professionals delivers services from initial planning and design, to implementation and integration, to ongoing managed operations, optimization, training and support. Currently, the Company manages its business operations in two segments, Products & Solutions and Services. The Company sells directly through its worldwide sales force and indirectly through its global network of channel partners, including distributors, service providers, dealers, value-added resellers, system integrators and business partners that provide sales and services support.

Basis of Presentation

Avaya Holdings has no material assets or standalone operations other than its ownership of Avaya Inc. and its subsidiaries. The accompanying unaudited interim Condensed Consolidated Financial Statements as of June 30, 2019 and for the nine months ended June 30, 2019, the period from December 16, 2017 through June 30, 2018, and the period from October 1, 2017 through December 15, 2017, reflect the operating results of Avaya Holdings and its consolidated subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial statements, and should be read in conjunction with the audited Consolidated Financial Statements and other financial information for the fiscal year ended September 30, 2018, included in the Company's Annual Report on Form 10-K filed with the SEC on December 21, 2018. In management's opinion, these unaudited interim Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary to state fairly the results of operations, financial position and cash flows for the periods indicated. The condensed consolidated results of operations for the interim periods reported are not necessarily indicative of the results for the entire fiscal year.

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the periods reported. These estimates include assessing the collectability of accounts receivable, sales returns and allowances, the use and recoverability of inventory, the realization of deferred tax assets, business restructuring reserves, pension and post-retirement benefit costs, the fair value of equity compensation, the fair value of assets and liabilities in connection with fresh start accounting as well as those acquired in business combinations, the recoverability of long-lived assets, useful lives and impairment of tangible and intangible assets including goodwill, the amount of exposure from potential loss contingencies, and fair value measurements, among others. The markets for the Company's products are characterized by intense competition, rapid technological development and frequent new product introductions, all of which could affect the future recoverability of the Company's assets. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Actual results may differ from these estimates.

During the nine months ended June 30, 2019, the Company recorded out-of-period adjustments to correct Selling, general and administrative expense. The impact resulted in a $6 million increase to Selling, general and administrative expense and a decrease to net income of $4 million for the nine months ended June 30, 2019. Management concluded that the correction was not material to any previously issued consolidated financial statements or to the nine months ended June 30, 2019.

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared on a basis that assumes that the Company will continue as a going concern and contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

On January 19, 2017 (the "Petition Date"), Avaya Holdings, together with certain of its affiliates, namely Avaya CALA Inc., Avaya EMEA Ltd., Avaya Federal Solutions, Inc., Avaya Holdings LLC, Avaya Holdings Two, LLC, Avaya Inc., Avaya Integrated Cabinet Solutions Inc. (n/k/a Avaya Integrated Cabinet Solutions LLC), Avaya Management Services Inc., Avaya Services Inc., Avaya World Services Inc., Octel Communications LLC, Sierra Asia Pacific Inc., Sierra Communication International LLC, Technology Corporation of America, Inc., Ubiquity Software Corporation, VPNet Technologies, Inc. and Zang, Inc. (n/k/a Avaya Cloud Inc.) (the "Debtors"), filed voluntary petitions for relief (the "Bankruptcy Filing") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The cases were jointly administered as Case No. 17-10089 (SMB). The Bankruptcy Court confirmed the Company's Second Amended Joint Chapter 11 Plan of Reorganization of Avaya Inc. and its Debtor Affiliates filed on October 24, 2017 (the "Plan of Reorganization") on November 28, 2017. Confirmation of the Plan of

6

Reorganization resulted in the discharge of certain claims against the Company that arose before the Petition Date and terminated all rights and interests of equity security holders as provided for in the Plan of Reorganization. The Debtors operated their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 of the Bankruptcy Code and the orders of the Bankruptcy Court until the Plan of Reorganization was substantially consummated and they emerged from bankruptcy on December 15, 2017 (the "Emergence Date").

On the Emergence Date, the Company applied fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the Condensed Consolidated Financial Statements after the Emergence Date are not comparable with the Condensed Consolidated Financial Statements on or before that date.

References to "Successor" or "Successor Company" relate to the financial position and results of operations of the reorganized Avaya Holdings after the Emergence Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of Avaya Holdings on or before the Emergence Date.

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." This standard clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this standard as of October 1, 2018 on a prospective basis. The adoption of this standard did not have an impact on the Company's Condensed Consolidated Financial Statements, however, the future impact of the standard will depend on the nature of any future acquisitions or dispositions made by the Company.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash." This standard requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard as of October 1, 2018 applying the retrospective transition method to each period presented. The adoption resulted in an increase of Net cash used for investing activities of $55 million and $21 million for the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor), respectively.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." This standard addresses the appropriate classification of certain cash flows as operating, investing, or financing. The Company adopted this standard as of October 1, 2018 applying the retrospective transition method to each accounting period presented. The adoption of the standard did not have a material impact on the Company's Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"). This standard superseded most of the previous revenue recognition guidance under GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue recognition. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. The Company adopted ASC 606 as of October 1, 2018 using the modified retrospective transition method applied to all open contracts with customers that were not completed as of September 30, 2018.

Upon adoption of ASC 606, sales that include professional services, are generally recognized as the services are performed as opposed to upon completion and acceptance of the project. When such arrangements include products, products revenue is generally recognized when the products are delivered as opposed to upon completion and acceptance of the project. Additionally, for cloud and managed services arrangements pursuant to which the customer purchases and owns the solution and Avaya provides the software as a service ("SaaS"), control of the software generally transfers to the customer and the related revenue is recognized, at the point-in-time the SaaS commences. Revenue recognition related to stand-alone product shipments, maintenance services, and certain cloud offerings remains substantially unchanged. In addition to the impacts on revenue recognition, the standard requires incremental contract acquisition costs (primarily sales commissions) to be capitalized and amortized on a systematic basis that is consistent with the transfer of goods or services to which the asset relates. These costs were formerly expensed as incurred. The impact of adopting ASC 606 is dependent upon contract-specific

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terms and the Company has chosen to use the allowed practical expedient, whereby incremental contract acquisition costs with an amortization period of one year or less are expensed as incurred.

On October 1, 2018, the beginning of the Company's fiscal 2019, the Company recorded a net increase to the opening Retained earnings balance of $92 million, net of tax, due to the cumulative impact of adopting ASC 606. During the nine months ended June 30, 2019, the Company recorded a $3 million adjustment to correct the ASC 606 impact that was recorded to Retained earnings on October 1, 2018. In connection with this adjustment, the Company also recorded an out-of-period adjustment during the nine months ended June 30, 2019 to correct goodwill recognized upon the application of fresh start accounting, which resulted in a $2 million decrease to Contract liabilities and a $2 million decrease to Goodwill. Management concluded that these corrections were not material to previously issued consolidated financial statements and to the three and nine months ended June 30, 2019.

The revised net increase to Retained earnings due to the cumulative impact of adopting ASC 606 was $95 million, net of tax. The increase to Retained earnings included $97 million for the portion of the transaction price that would have been recognized as revenue under prior guidance (ASC "605"). These amounts will not be recognized as revenue in future periods and are primarily attributable to open contracts that contained professional services, both on a stand-alone basis and when sold together with hardware and software, for which revenue recognition was deferred until project completion under ASC 605.

The impact of the adoption of ASC 606 on the September 30, 2018 Condensed Consolidated Balance Sheet was as follows:

(In millions)	September 30, 2018 As Reported		Adjustments			Upon Adoption of ASC 606
ASSETS
Accounts receivable, net	$	377	$	(1	)	$	376
Inventory	81		(24		)	57
Contract assets	—		78			78
Contract costs	—		109			109
Other current assets	170		(66		)	104
Property, plant and equipment, net	250		(1		)	249
Deferred income taxes, net	29		(2		)	27
Other assets	74		16			90
LIABILITIES
Contract liabilities	484		(17		)	467
Other current liabilities	148		4			152
Deferred income taxes, net	140		29			169
Other liabilities	374		(2		)	372
STOCKHOLDERS' EQUITY
Retained earnings	287		95			382

For additional information refer to Note 3, "Revenue Recognition," for disclosures related to the adoption of ASC 606 and an updated accounting policy related to revenue recognition and contract costs.

Recent Standards Not Yet Effective

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract." This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for the Company in the first quarter of fiscal 2021, with early adoption permitted. The Company is currently assessing the impact the new guidance will have on its Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. This update removes disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. This standard is effective for the Company beginning in fiscal 2021, with early adoption permitted. The amendments in the standard need to be applied on a retrospective basis. The Company is currently assessing the impact of the standard on its disclosures.

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In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." This standard modifies the disclosure requirements on fair value measurements by removing certain disclosures, modifying certain disclosures and adding additional disclosures. This standard is effective for the Company beginning in the first quarter of fiscal 2021. Certain disclosures in the standard need to be applied on a retrospective basis and others on a prospective basis. The Company is currently assessing the impact of the standard on its disclosures.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This standard allows companies to reclassify from accumulated other comprehensive income to retained earnings any stranded tax benefits resulting from the enactment of the Tax Cuts and Jobs Act. This standard is effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that the adoption of this standard may have on its Condensed Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This standard, along with other guidance subsequently issued by the FASB, requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This standard is effective for the Company in the first quarter of fiscal 2021 on a prospective basis. The Company is currently evaluating the impact that the adoption of this standard may have on its Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This standard, along with other guidance subsequently issued by the FASB, requires lessees to recognize lease assets and liabilities for all leases with lease terms of more than 12 months. The standard makes similar changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. Presentation of leases within the statements of operations and statements of cash flows will primarily depend on its classification as a finance or operating lease. This standard is effective for the Company in the first quarter of fiscal 2020 with early adoption permitted. The Company expects to adopt this standard on October 1, 2019 using a modified retrospective transition method as of the beginning of the period of adoption and is continuing to evaluate the impact of this standard on its Condensed Consolidated Financial Statements.

3. Revenue Recognition

On October 1, 2018, the Company adopted ASC 606 using the modified retrospective transition method. Accordingly, the impact of adoption was recorded as an adjustment to Retained earnings as of October 1, 2018 and represents the difference between ASC 606 and ASC 605 applied to all open contracts with customers that were not completed as of September 30, 2018. Under the modified retrospective method, results for reporting periods beginning after September 30, 2018 are presented under ASC 606 while prior period financial information is not adjusted and continues to be reported in accordance with ASC 605. The Company elected to use the contract modification practical expedient, whereby all contract modifications for each contract before October 1, 2018 are aggregated and evaluated at the adoption date.

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Impact of ASC 606 on Financial Statement Line Items

The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Balance Sheet as of June 30, 2019 is as follows:

	June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606
ASSETS
Inventory	$	71		$	33		$	104
Contract assets	178			(178		)	—
Contract costs	128			(128		)	—
Other current assets	149			100			249
Property, plant and equipment, net	243			1			244
Deferred income taxes, net	25			2			27
Other assets	109			(10		)	99
LIABILITIES
Accounts payable	292			(1		)	291
Contract liabilities	470			48			518
Other current liabilities	130			4			134
Deferred income taxes, net	120			(29		)	91
Other liabilities	390			2			392
STOCKHOLDERS' EQUITY
Retained earnings	(255		)	(204		)	(459		)

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The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Statements of Operations for the three and nine months endedJune 30, 2019 is as follows:

	Three months ended June 30, 2019									Nine months ended June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606			As Reported			Adjustments			Without Adoption of ASC 606
REVENUE
Products	$	297		$	(26	)	$	271		$	908		$	(71	)	$	837
Services	420			(19		)	401			1,256			(60		)	1,196
	717			(45		)	672			2,164			(131		)	2,033
COSTS
Products:
Costs	109			(4		)	105			329			(13		)	316
Amortization of technology intangible assets	43			—			43			130			—			130
Services	175			(7		)	168			522			(20		)	502
	327			(11		)	316			981			(33		)	948
GROSS PROFIT	390			(34		)	356			1,183			(98		)	1,085
OPERATING EXPENSES
Selling, general and administrative	253			(1		)	252			761			3			764
Research and development	49			—			49			154			—			154
Amortization of intangible assets	41			—			41			122			—			122
Impairment charges	659			—			659			659			—			659
Restructuring charges, net	1			—			1			12			—			12
	1,003			(1		)	1,002			1,708			3			1,711
OPERATING LOSS	(613		)	(33		)	(646		)	(525		)	(101		)	(626		)
Interest expense	(59		)	—			(59		)	(177		)	—			(177		)
Other income, net	12			—			12			35			—			35
LOSS BEFORE INCOME TAXES	(660		)	(33		)	(693		)	(667		)	(101		)	(768		)
Benefit from (provision for) income taxes	27			(37		)	(10		)	30			(8		)	22
NET LOSS	$	(633	)	$	(70	)	$	(703	)	$	(637	)	$	(109	)	$	(746	)

The adoption of ASC 606 did not impact net cash provided by or used for operating, investing, or financing activities within the Condensed Consolidated Statement of Cash Flows for the nine months ended June 30, 2019.

Revenue Recognition Policy

The Company derives revenue primarily from the sale of products and services for communications systems and applications. The Company sells directly through its worldwide sales force and indirectly through its global network of channel partners, including distributors, service providers, dealers, value-added resellers, systems integrators and business partners that provide sales and services support.

In accordance with ASC 606, the Company accounts for a customer contract when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance and it is at least probable that the Company will collect the consideration to which it is entitled. Revenue is recognized upon the transfer of control of the promised products and services to customers. Judgment is required in instances where the Company’s contracts include multiple products and services to determine whether each should be accounted for as a separate performance obligation. The Company enters into contracts that include various combinations of products and services, each of which is generally capable of being distinct as well as distinct within the context of the contracts.

Customer contracts are typically made pursuant to purchase orders and statements of work based on master purchase or partner agreements. Invoicing typically occurs upon customer acceptance or monthly for a series of services. Payment is due based on the Company’s standard payment terms which are typically within 30 to 60 days of invoice issuance. The Company does not typically provide financing arrangements to customers. For certain services and customer types, customers will remit payment before the services are provided. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determined that contracts do not include a significant financing component. The primary purpose of the invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, not to receive

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financing from or to provide financing to customers. Certain contracts include performance obligations accounted for as a series which also include variable consideration (primarily usage-based fees). For these arrangements, variable consideration is not estimated and allocated to the entire performance obligation, rather the variable fees are recognized in the period in which the usage occurs in accordance with the "right to invoice" practical expedient.

The total transaction price for each contract is determined based on the total consideration specified in the contract, including variable consideration such as sales incentives and other discounts. The expected value method is generally used when estimating variable consideration, which typically reduces the total transaction price due to the nature of the elements to which the variable consideration relates. These estimates reflect the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying patterns. The Company excludes from the transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts are not included as a component of net sales or cost of sales.The expected value method requires judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each performance obligation. Depending on the facts and circumstances, a change in variable consideration estimate will either be accounted for at the contract level or using the portfolio method, in accordance with the prescribed practical expedient. Reserves for contractual stock rotation rights to channel partners to support the management of inventory and certain other sales incentives are determined using the portfolio method. The Company also considers the customers’ rights of return in determining the transaction price where applicable.

The Company allocates the transaction price to each performance obligation based on its relative standalone selling price and recognizes revenue as each performance obligation is satisfied. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company uses a range of selling prices to estimate standalone selling price when each of the products and services is sold separately. The Company typically has more than one standalone selling price for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the standalone selling price. In instances where standalone selling price is not directly observable, such as when we do not sell the product or service separately, the Company determines the standalone selling price using information that may include market conditions and other observable inputs.

Amounts billed to customers for shipping and handling activities are considered contract fulfillment activities and not a separate performance obligation of the contract. Shipping and handling fees are recorded as revenue and the related cost is a cost to fulfill the contract.

Contract modifications are accounted for as separate contracts if the additional products and services are distinct and priced at standalone selling prices. If the additional products and services are distinct, but not priced at standalone selling prices, the modification is treated as a termination of the existing contract and the creation of a new contract. Lastly, if the additional products and services are not distinct within the context of the contract, the modification is combined with the original contract and either an increase or decrease in revenue is recognized on the modification date. During the three and nine months endedJune 30, 2019, the Company recognized revenue of $5 million for contracts modified during the period that had performance obligations satisfied in prior periods.

Software

The Company’s software licenses provide users with access to capabilities such as voice, video, conferencing, messaging and collaboration. Software licenses also add functionality to the Company’s hardware. The Company’s software licenses for on-premise customer software provide the customer with a right to use the software as it exists when it is made available to the customer and are accounted for as distinct performance obligations. The Company’s software licenses are sold through both direct and indirect channels with terms that are either perpetual or time based, both of which provide the end-user with the same functionality. The main difference between perpetual and term licenses is the duration over which the customer benefits from the software. Revenue from on-premise customer software licenses is generally recognized at the point-in-time the software is made available to the customer, via direct sale to the end-user or indirect sale to a channel partner, based on the fixed minimum revenue commitment under the arrangement. However, revenue cannot be recognized before the beginning of the period during which the customer can use and benefit from the license. In instances where the Company’s software licenses include a usage-based fee, revenue associated with the incremental usage is recognized at the point-in-time the incremental usage occurs.

Hardware

The Company’s hardware, phones, gateways, and servers, each of which has a stand-alone functionality, are generally considered distinct performance obligations. Hardware is sold through both direct and indirect channels and revenue is

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recognized at the point-in-time at which control of the product is transferred to the customer, via direct sale to the end-user or indirect sale to a channel partner, generally upon delivery, as defined in the contract.

Global Support Services

The Company’s global support services provide supplemental maintenance options to end-users in support of the Company’s products and solutions, including when and if available upgrade rights and maintenance for hardware. These services are typically accounted for as distinct performance obligations. Given that global support services consist of a series of distinct promises that are satisfied over time in the form of a single performance obligation comprised of a stand-ready obligation, these services are generally recognized ratably over the period during which the services are performed as customers simultaneously consume and receive benefits. Maintenance contracts typically have terms that range from one to five years.

Professional Services

The Company’s professional services include the design, implementation and development of communication solutions. Professional services are sold through the Company’s direct and indirect channels either on a stand-alone basis or with other hardware, software and services and are generally accounted for as distinct performance obligations. Revenue for professional services is generally recognized over time based on the cost of effort incurred to date relative to the total cost of effort expected to be incurred as customers simultaneously consume and receive benefits. Effort incurred generally represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contracts for professional services typically have terms that range from four to six weeks for simple engagements and from six months to one year for more complex engagements.

Cloud and Managed Services

The Company’s managed services provide additional support options to end-users on top of the Company’s supplemental maintenance services, including hardware support, help-desk routing and system monitoring services. The Company’s managed services are sold either on a stand-alone basis or together with the Company’s hardware, software and other services, and are generally accounted for as distinct performance obligations. The Company’s managed services are provided through both direct and indirect channels. Managed services consist of a series of distinct promises that are satisfied over time in the form of a single performance obligation comprised of a stand-ready obligation. Contracts for managed services typically have terms that range from one to five years.

The Company’s cloud offerings enable customers to take advantage of our technology via the cloud, on-premises, or a hybrid of both. The software that enables the core communications functionality is offered both as a sale of perpetual or time based licenses or through a SaaS. Cloud offerings can include supplemental maintenance and managed services and are sold through the Company’s direct and indirect channels.

Cloud and managed services offerings often include multiple performance obligations. Each performance obligation can itself include a series of distinct promises that are satisfied over time. Total consideration for a project is allocated to each performance obligation, with revenue recognized ratably over the period during which the services are performed as customers simultaneously consume and receive benefits. Variable consideration from incremental usage above a fixed fee is recognized at the point-in-time at which the usage occurs.

Warranties

The Company offers standard limited warranties that provide the customer with assurance that its products will function in accordance with contract specifications. The Company’s standard limited warranties are not sold separately but are included with each customer purchase. Warranties are not considered separate performance obligations, and therefore, warranty expense is accrued at the time the related revenue is recognized.

Disaggregation of Revenue

The following tables provide the Company's disaggregated revenue for the three and nine months endedJune 30, 2019:

(In millions)	Three months ended June 30, 2019			Nine months ended June 30, 2019
REVENUE
Products & Solutions	$	298		$	913
Services	422			1,269
Unallocated Amounts	(3		)	(18		)
	$	717		$	2,164

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	Three months ended June 30, 2019
(In millions)	Products & Solutions		Services		Unallocated			Total
Revenue:
U.S.	$	149	$	245	$	(2	)	$	392
International:
Europe, Middle East and Africa	91		93		(1		)	183
Asia Pacific	38		47		—			85
Americas International - Canada and Latin America	20		37		—			57
Total International	149		177		(1		)	325
Total revenue	$	298	$	422	$	(3	)	$	717

	Nine months ended June 30, 2019
(In millions)	Products & Solutions		Services		Unallocated			Total
Revenue:
U.S.	$	429	$	744	$	(12	)	$	1,161
International:
Europe, Middle East and Africa	290		283		(3		)	570
Asia Pacific	113		131		(2		)	242
Americas International - Canada and Latin America	81		111		(1		)	191
Total International	484		525		(6		)	1,003
Total revenue	$	913	$	1,269	$	(18	)	$	2,164

Unallocated amounts represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

Transaction Price Allocated to the Remaining Performance Obligations

Transaction price allocated to remaining performance obligations that are wholly or partially unsatisfied as of June 30, 2019 is $2.7 billion, of which 57% and 27% is expected to be recognized within 12 months and 13-24 months, respectively, with the remaining balance recognized thereafter. This excludes amounts for remaining performance obligations that are (1) for contracts recognized over time using the "right to invoice" practical expedient, (2) related to sales or usage based royalties promised in exchange for a license of intellectual property, and (3) related to variable consideration allocated entirely to a wholly unsatisfied performance obligation.

Contract Balances

The Company records a contract asset when revenue is recognized in advance of the right to bill, pursuant to customer contract terms. The contract asset decreases when the Company has the right to bill the customer which is generally triggered by the satisfaction of additional performance obligations or contract milestones. The Company records a contract liability when payment is received from the customer in advance of the Company satisfying a performance obligation and the contract liability is reduced as performance obligations are satisfied and revenue is recognized. The Company records the net contract asset or liability position for each customer contract.

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The following table provides information about accounts receivable, contract assets and contract liabilities for the periods presented:

(In millions)	June 30, 2019		October 1, 2018		Increase (Decrease)
Accounts receivable, net	$	276	$	376	$	(100	)
Contract assets:
Current	$	178	$	78	$	100
Non-current (Other assets)	3		3		—
	$	181	$	81	$	100
Cost of obtaining a contract:
Current (Contract costs)	$	88	$	64	$	24
Non-current (Other assets)	44		36		8
	$	132	$	100	$	32
Cost to fulfill a contract:
Current (Contract costs)	$	40	$	45	$	(5	)
Contract liabilities:
Current	$	470	$	467	$	3
Non-current (Other liabilities)	76		52		24
	$	546	$	519	$	27

The change in contract assets and contract liabilities primarily results from the timing difference between the Company’s satisfaction of a performance obligation and the timing of the payment from the customer. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. The Company recognizes a contract asset when it transfers products and services to a customer in advance of scheduled billings. Contract assets decrease when the Company invoices the customer or the right to receive consideration is unconditional. The Company did not record any asset impairment charges related to contract assets during the nine months ended June 30, 2019. Contract liabilities are recorded when the Company receives payment from the customer in advance of the Company’s completion of performance obligation(s). During the three and nine months endedJune 30, 2019, the Company recognized revenue of $109 million and $505 million, respectively, that had been recorded as a Contract liability at October 1, 2018.

Contract Costs

The Company capitalizes direct and incremental costs incurred to obtain and to fulfill a contract, such as sales commissions and products and services, respectively. These costs are recognized as an asset if the Company expects to recover them and are amortized consistent with the transfer to the customer of the underlying performance obligations. Costs to obtain a contract are amortized using the portfolio approach over the average term of the customer contracts, which corresponds to the period of benefit. Costs incurred to obtain a contract with an amortization period of one year or less are expensed as incurred, in accordance with the prescribed practical expedient. For the three months ended June 30, 2019, the Company recognized $27 million for amortization of costs to obtain customer contracts, which was included in Selling, general and administrative expense. For the nine months ended June 30, 2019, the Company recognized $73 million for amortization of costs to obtain customer contracts, of which $70 million was included in Selling, general and administrative expense and the remaining $3 million was a reduction to Revenue.

Contract fulfillment costs are recognized consistent with the transfer to the customer of the underlying performance obligations based on the specific contracts to which they relate. For the three and nine months endedJune 30, 2019, the Company recognized $11 million and $31 million of contract fulfillment costs within Costs, respectively.

4. Business Combinations and Strategic Investments

Business Combinations

On March 9, 2018 (the "Acquisition Date"), the Company acquired Intellisist, Inc. ("Spoken"), a United States-based private technology company, which provides cloud-based Contact Center as a Service solutions and customer experience management and automation applications. The total purchase price was $172 million, consisting of $157 million in cash, $14 million in

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contingent consideration and a $1 million settlement of Spoken’s net payable to the Company which mainly related to services provided by the Company to Spoken under a co-development partnership prior to the acquisition.

Upon the achievement of three specified performance targets ("Earn-outs"), the Company is required to pay up to $16 million of contingent consideration to Spoken's former owners and employees and up to $4 million in discretionary earn-out bonuses ("Earn-out Bonuses") to Spoken employees who have contributed to the achievement of the Earn-outs. The fair value of the Earn-outs at the Acquisition Date was $14 million, which was calculated using a probability-weighted discounted cash flow model and is remeasured to fair value at each subsequent reporting period. The Earn-out Bonuses, which are intended to incentivize continuing employees to assist in achieving the Earn-outs, are excluded from the acquisition consideration and are recognized as compensation expense in the Company's Condensed Consolidated Financial Statements ratably over the estimated Earn-out periods. During the nine months ended June 30, 2019, the Company paid $11 million and $2 million for Earn-outs and Earn-out Bonuses, respectively, related to the achievement of two of the three Earn-out targets. The third Earn-out target was completed during the three months ended June 30, 2019 and the corresponding Earn-out and Earn-out Bonuses are expected to be paid by the Company during the remainder of fiscal 2019. As of June 30, 2019, the fair value of the Earn-out liability was $5 million.

In connection with this acquisition, the Company recorded goodwill of $117 million, which was assigned to the Products & Solutions segment, identifiable intangible assets with a fair value of $64 million, and other net liabilities of $9 million. The goodwill recognized is attributable primarily to the potential that the Spoken technology, cloud platform and assembled workforce will accelerate the Company's growth in cloud-based solutions. The Company determined that the goodwill is not deductible for tax purposes.

The acquired intangible assets of $64 million included technology and patents of $56 million with a weighted average useful life of 4.9 years, $5 million of in-process research and development ("IPR&D") activities, which are considered indefinite lived until projects are completed or abandoned, and customer relationships of $3 million with a weighted average useful life of 7.5 years. During the nine months ended June 30, 2019, $3 million of the acquired IPR&D activities have been completed and are being amortized over a weighted average useful life of 5.0 years and $2 million were abandoned and written off (see Note 5).

Spoken became a wholly-owned subsidiary of the Company on March 9, 2018. The Company's Condensed Consolidated Financial Statements reflect the financial results of the operations of Spoken beginning on March 9, 2018. Spoken’s revenue and operating loss included in the Company’s results for the nine months ended June 30, 2019, was $8 million and $21 million, respectively. The Company has finalized its purchase accounting for the Spoken acquisition.

Strategic Investments

On May 20, 2019, the Company made a $10 million investment in a unified communications as a service (“UCaaS”) provider delivering public sector Federal Risk and Authorization Management Program ("FedRAMP") security requirements (the “Strategic Investment”) through the acquisition of a 3-year convertible note (“Promissory Note”). The Strategic Investment offers hosted, cloud-based Voice over Internet Protocol infrastructure services and a FedRAMP authorized hosting platform. The Strategic Investment will use the proceeds from the issuance of the Promissory Note to help fund its working capital.

The Promissory Note has a principal amount of $10 million, bears interest at a rate of 8% per annum and has a maturity date of May 20, 2022. Under the terms of the Promissory Note, the Company may, at its sole discretion, convert its interest in the Promissory Note into newly issued Class D units of the Strategic Investment representing no less than 27.3% of the Strategic Investment's fully diluted capitalization at the time of the conversion. On or after the Promissory Note’s maturity date, the Company shall have the option, at its sole discretion, to demand payment from the Strategic Investment for the unpaid principal and accrued interest on the Promissory Note. In conjunction with the Promissory Note, the Company entered into a separate agreement with the Strategic Investment and its equity holders which provides the Company with an option to purchase from such equity holders any or all of the outstanding LLC units of the Strategic Investment for prices specified in the relevant agreement. The option is exercisable upon the earlier of December 31, 2021 or the Strategic Investment reaching specified milestones. The option does not currently convey power to the Company as it is not currently exercisable and requires significant economic outlay.

The Promissory Note is classified as an available-for-sale security as of June 30, 2019 with a carrying value and fair value of $10 million and is recorded within Other Assets in the Condensed Consolidated Balance Sheets. Although the Company maintains a variable interest in the Strategic Investment, it is not the primary beneficiary as it does not direct the activities that most significantly impact the economic performance of the Strategic Investment through the rights maintained with the Promissory Note or separate agreement. As of June 30, 2019, the Company's maximum exposure to loss as a result of its involvement with the Strategic Investment is limited to the initial investment in the Promissory Note of $10 million.

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5. Goodwill, net and Intangible Assets, net

Goodwill, net

The changes in the carrying amount of goodwill by segment during fiscal 2019 were as follows:

(In millions)	Products & Solutions			Services			Total
Balance as of September 30, 2018	$	1,283		$	1,481		$	2,764
Impairment charges	(657		)	—			(657		)
Other	—			(2		)	(2		)
Balance as of June 30, 2019	$	626		$	1,479		$	2,105

Goodwill is not amortized but is subject to periodic testing for impairment in accordance with GAAP at the reporting unit level, which is one level below the Company’s operating segments. The Company has five reporting units, all of which are subject to impairment testing annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company's goodwill was primarily recorded upon emergence from bankruptcy as a result of applying fresh start accounting.

The Company concluded that triggering events occurred for all of its reporting units as of June 30, 2019 due to a sustained decrease in the Company’s stock price and lower than planned financial results which led to revisions to the Company's long-term forecast during the third quarter of fiscal 2019. As a result, the Company performed an interim quantitative goodwill impairment test as of June 30, 2019 to compare the fair values of its reporting units to their respective carrying amounts, including the goodwill allocated to each reporting unit.

The Company estimated the fair value of each reporting unit using a weighting of fair values derived from an income and a market approach. Under the income approach, the fair value of a reporting unit is based on the future cash flows expected from that reporting unit. Future cash flows are based on forward-looking information regarding revenue and costs for each reporting unit and are discounted using an appropriate discount rate in a discounted cash flows model. The discounted cash flows model relies on assumptions regarding revenue growth rates, gross profit, projected working capital needs, selling, general and administrative expenses, research and development expenses, business restructuring costs, capital expenditures, income tax rates, discount rates and terminal growth rates. The discount rates the Company used represent the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return an outside investor would expect to earn. To estimate cash flows beyond the final year of its model, the Company used a terminal value approach. Under this approach, the Company applied a perpetuity growth assumption to determine the terminal value. The Company incorporated the present value of the resulting terminal value into its estimate of fair value. Forecasted cash flows for each reporting unit consider current economic conditions and trends, estimated future operating results, the Company’s view of growth rates and anticipated future economic conditions. Revenue growth rates inherent in this forecast are based on input from internal and external market intelligence research sources that compare factors such as growth in global economies, regional trends in the telecommunications industry and product evolution from a technological segment basis. Macroeconomic factors such as changes in economies, product evolutions, industry consolidations and other changes beyond the Company’s control could have a positive or negative impact on achieving its targets.

The market approach estimates the fair value of a reporting unit by applying multiples of operating performance measures to the reporting unit's operating performance (the "Guideline Public Company Method"). These multiples were derived from comparable publicly-traded companies with similar investment characteristics to the reporting unit. The key estimates and assumptions that were used to determine the fair value under this market approach include current and forward 12-month operating performance results, as applicable, and the selection of the relevant multiples that were applied.

The results of the Company’s interim goodwill impairment test as of June 30, 2019 indicated that the estimated fair values of the Company’s Unified Communications (“UC”), Global Support Services (“GSS”), Avaya Professional Services (“APS”) and Enterprise Cloud and Managed Solutions (“ECMS”) reporting units were greater than their carrying amounts, however, the carrying amount of the Company’s Contact Center ("CC") reporting unit within the Products & Solutions segment exceeded its estimated fair value primarily due to a reduction in the Company's long-term forecast. As a result, the Company recorded a goodwill impairment charge of $657 million, representing the amount by which the carrying amount of the CC reporting unit exceeded its fair value. As of June 30, 2019, the remaining carrying amount of goodwill for the CC reporting unit was $197 million.

As of June 30, 2019, the fair value of the UC, APS and ECMS reporting units exceeded their carrying amounts by more than 10%, however, the GSS reporting unit had an excess fair value over its carrying value of 7%. The goodwill assigned to GSS is $1,446 million. An increase in the GSS discount rate of 65 basis points or a decrease in the GSS long-term growth rate of 95 basis points used in the interim goodwill impairment test as of June 30, 2019 would result in an estimated fair value below its carrying value.

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To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional impairment charges in the future.

Intangible Assets, net

The Company's intangible assets consist of the following for the periods indicated:

(In millions)	Technology and Patents			Customer Relationships and Other Intangibles			Trademarks and Trade Names			Total
Balance as of June 30, 2019
Finite-lived intangible assets:
Cost	$	961		$	2,156		$	42		$	3,159
Accumulated amortization	(265		)	(240		)	(9		)	(514		)
Finite-lived intangible assets, net	696			1,916			33			2,645
Indefinite-lived intangible assets:
Cost	2			—			333			335
Accumulated impairment	(2		)	—			—			(2		)
Indefinite-lived intangible assets, net	—			—			333			333
Intangible assets, net	$	696		$	1,916		$	366		$	2,978
Balance as of September 30, 2018
Finite-lived intangible assets:
Cost	$	959		$	2,157		$	43		$	3,159
Accumulated amortization	(135		)	(124		)	(3		)	(262		)
Finite-lived intangible assets, net	824			2,033			40			2,897
Indefinite-lived intangible assets	5			—			332			337
Intangible assets, net	$	829		$	2,033		$	372		$	3,234

Intangible assets include technology and patents, customer relationships, and trademarks and trade names. Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets. Intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment annually and more frequently if events occur or circumstances change that indicate an asset may be impaired.

During the three months ended June 30, 2019, the Company elected to abandon an in-process research and development project acquired with Spoken (see Note 4) since it no longer aligned with the Company’s technology roadmap. As a result, the Company recorded an impairment charge of $2 million to write down the full carrying amount.

As a result of the goodwill triggering events described above, the Company performed a recoverability test on all of its finite-lived asset groups as of June 30, 2019 before proceeding to the goodwill impairment review and concluded that no impairment charge was necessary. The recoverability test of finite-lived assets was based on forecasts of undiscounted cash flows for each asset group. The Company also performed an interim quantitative impairment test for its indefinite-lived intangible asset, the Avaya Trade Name, as of June 30, 2019. The Avaya Trade Name was evaluated for impairment using the relief-from-royalty method. Under this methodology, the fair value of the trade name was determined by applying a royalty rate to forecasted net revenues and discounted using a risk-adjusted rate of capital. Revenue growth rates inherent in the forecast were based on input from internal and external market intelligence research sources that compare factors such as growth in global economies, regional trends in the telecommunications industry and product evolution from a technological segment basis. The royalty rate was determined using a set of observed market royalty rates. The result of the impairment test as of June 30, 2019 indicated that the estimated fair value of the trade name exceeded its carrying amount by more than 10% and no impairment existed.

To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional impairment charges in the future.

The total goodwill and intangible asset impairment charges described above of $659 million are presented in the Impairment charges line item in the Condensed Consolidated Statement of Operations.

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6. Supplementary Financial Information

Condensed Consolidated Statements of Operations Information

The following table presents a summary of Other income (expense), net for the periods indicated:

	Successor											Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
OTHER INCOME (EXPENSE), NET
Interest income	$	4		$	1	$	11		$	2		$	2
Foreign currency (losses) gains, net	(1		)	25		(8		)	24			—
Income from transition services agreement, net	—			1		—			5			3
Other pension and post-retirement benefit credits (costs), net	1			4		5			9			(8		)
Change in fair value of emergence date warrants	7			6		28			(9		)	—
Other, net	1			—		(1		)	1			1
Total other income (expense), net	$	12		$	37	$	35		$	32		$	(2	)

A summary of Reorganization items, net for the periods indicated is presented in the following table:

	Predecessor
(In millions)	Period from October 1, 2017 through December 15, 2017
REORGANIZATION ITEMS, NET
Net gain on settlement of Liabilities subject to compromise	$	1,778
Net gain on fresh start adjustments	1,697
Bankruptcy-related professional fees	(56		)
Other items, net	(3		)
Reorganization items, net	$	3,416
Cash payments for reorganization items	$	2,524

Costs directly attributable to the implementation of the Plan of Reorganization were reported as Reorganization items, net. The cash payments for reorganization items for the period from October 1, 2017 through December 15, 2017 (Predecessor) included $2,468 million of claims paid related to Liabilities subject to compromise and $56 million for bankruptcy-related professional fees, including emergence and success fees paid on the Emergence Date.

Supplemental Cash Flow Information

	Successor										Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018		Period from October 1, 2017 through December 15, 2017
OTHER PAYMENTS
Interest payments	$	61		$	52	$	160		$	99	$	15
Income tax payments	13			8		48			17		7
NON-CASH INVESTING ACTIVITIES
(Decrease) increase in Accounts payable for Capital expenditures	$	(6	)	$	5	$	(1	)	$	5	$	—

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The following table presents a reconciliation of cash, cash equivalents, and restricted cash that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows for the periods presented:

	Successor						Predecessor
(In millions)	June 30, 2019		September 30, 2018		June 30, 2018		December 15, 2017		September 30, 2017
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	729	$	700	$	685	$	366	$	876
Restricted cash included in other current assets	—		—		10		65		85
Restricted cash included in other assets	5		4		4		4		5
Total cash, cash equivalents, and restricted cash	$	734	$	704	$	699	$	435	$	966

As of June 30, 2018 (Successor), restricted cash in other current assets consisted primarily of funds held related to the sale of the Company's Networking business in July 2017. As of December 15, 2017 (Predecessor), restricted cash in other current assets consisted primarily of funds held for bankruptcy-related professional fees. As of September 30, 2017 (Predecessor), restricted cash in other current assets consisted primarily of cash that was drawn from term loans under the Debtor-in-Possession credit agreement to cash collateralize existing letters of credit.

7. Business Restructuring Reserves and Programs

For the three months ended June 30, 2019 and 2018 (Successor), the Company recognized restructuring charges of $1 million and $30 million, respectively. For the nine months ended June 30, 2019 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor), the Company recognized restructuring charges of $12 million, $80 million and $14 million, respectively. The restructuring charges include changes in estimates for increases and decreases in costs or changes in the timing of payments related to the restructuring programs of prior fiscal years. The Company's restructuring charges generally include separation charges which include, but are not limited to, termination payments, pension fund payments, and health care and unemployment insurance costs to be paid to, or on behalf of, the affected employees; and lease obligation charges. As the Company continues to evaluate opportunities to streamline its operations, it may identify cost savings globally and take additional restructuring actions in the future and the costs of those actions could be material. The Company does not allocate restructuring reserves to its operating segments.

Fiscal 2019 Restructuring Program

Recognized restructuring charges for the fiscal 2019 restructuring program included employee separation costs associated with employee severance actions primarily in the U.S., Europe, Middle East and Africa ("EMEA") and Canada, for which the related payments are expected to be completed by fiscal 2021.

The following table summarizes the components of the fiscal 2019 restructuring program for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations		Total
Restructuring charges	$	10		$	2	$	12
Cash payments	(5		)	—		(5		)
Impact of foreign currency fluctuations	(1		)	—		(1		)
Accrual balance as of June 30, 2019	$	4		$	2	$	6

Fiscal 2018 Restructuring Program

Fiscal 2018 restructuring obligations include employee separation costs associated with employee severance actions primarily in EMEA, for which the related payments are expected to be completed by fiscal 2026.

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The following table summarizes the components of the fiscal 2018 restructuring program for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations		Total
Accrual balance as of September 30, 2018	$	54		$	—	$	54
Adjustments (1)	(1		)	—		(1		)
Cash payments	(15		)	—		(15		)
Impact of foreign currency fluctuations	(1		)	—		(1		)
Accrual balance as of June 30, 2019	$	37		$	—	$	37

⁽¹⁾  Includes changes in estimates for increases and decreases in costs related to the fiscal 2018 restructuring program, which are recorded in Restructuring charges, net in the Consolidated Statements of Operations in the period of the adjustment.

Fiscal 2008 through 2017 Restructuring Programs

These obligations are primarily for costs associated with eliminating employee positions and exiting facilities. The payments related to the headcount reductions identified in these programs are expected to be substantially completed by fiscal 2026. Future rental payments, net of estimated sublease income, related to operating lease obligations for unused space in connection with the closing or consolidation of facilities are expected to continue through fiscal 2021.

The following table aggregates the remaining components of the fiscal 2008 through 2017 restructuring programs for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations			Total
Accrual balance as of September 30, 2018	$	38		$	6		$	44
Adjustments (1)	1			—			1
Cash payments	(12		)	(2		)	(14		)
Impact of foreign currency fluctuations	(1		)	—			(1		)
Accrual balance as of June 30, 2019	$	26		$	4		$	30

⁽¹⁾  Includes changes in estimates for increases and decreases in costs related to the fiscal 2008 through 2017 restructuring programs, which are recorded in Restructuring charges, net in the Consolidated Statements of Operations in the period of the adjustment.

8. Financing Arrangements

The following table reflects principal amounts of debt and debt net of discounts and issuance costs for the periods presented:

	June 30, 2019					September 30, 2018
(In millions)	Principal amount		Net of discounts and issuance costs			Principal amount		Net of discounts and issuance costs
Term Loan Credit Agreement due December 15, 2024	$	2,881	$	2,852		$	2,903	$	2,870
Convertible 2.25% senior notes due June 15, 2023	350		268			350		256
Total debt	$	3,231	3,120			$	3,253	3,126
Debt maturing within one year			(29		)			(29		)
Long-term debt, net of current portion			$	3,091				$	3,097

Term Loan and ABL Credit Agreements

On December 15, 2017, Avaya Inc. entered into (i) the Term Loan Credit Agreement among Avaya Inc., as borrower, Avaya Holdings, the lending institutions from time to time party thereto, and Goldman Sachs Bank USA, as administrative agent and collateral agent, which provided a $2,925 million term loan facility maturing on December 15, 2024 (the "Term Loan Credit Agreement") and (ii) the ABL Credit Agreement maturing on December 15, 2022, among Avaya Inc., as borrower, Avaya Holdings, the several other borrowers party thereto, the several lenders from time to time party thereto, and Citibank, N.A., as administrative agent and collateral agent, which provided a revolving credit facility consisting of a U.S. tranche and a foreign tranche allowing for borrowings of up to an aggregate principal amount of $300 million from time to time, subject to borrowing base availability (the "ABL Credit Agreement" and, together with the Term Loan Credit Agreement, the "Credit

21

Agreements"). On June 18, 2018, the Company amended the Term Loan Credit Agreement to reduce interest rates and to reduce the London Inter-bank Offered Rate ("LIBOR") floor that existed under the original agreement from 1.00% to 0.00%.

For the three months ended June 30, 2019 and 2018, the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018, the Company recognized interest expense of $51 million, $50 million, $151 million and $106 million, respectively, related to the Term Loan Credit Agreement, including the amortization of discounts and issuance costs.

Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At June 30, 2019, the Company had issued and outstanding letters of credit and guarantees of $45 million under the ABL Credit Agreement. As of June 30, 2019, the Company had no borrowings outstanding under the ABL. The aggregate additional principal amount that may be borrowed under the ABL Credit Agreement, based on the borrowing base less $45 million of outstanding letters of credit and guarantees, was $139 million at June 30, 2019. For the nine months ended June 30, 2019, the Company recognized interest expense of $1 million related to the ABL Credit Agreement resulting from the unused commitment fee. For the three months ended June 30, 2019, the three months ended June 30, 2018, and the period from December 16, 2017 through June 30, 2018, interest expense recognized related to the ABL Credit Agreement was not material.

Convertible Notes

On June 11, 2018, the Company issued its 2.25% Convertible Notes in an aggregate principal amount of $350 million (including the underwriters’ exercise in full of an over-allotment option of $50 million), which mature on June 15, 2023 (the "Convertible Notes"). The Convertible Notes were issued under an indenture, by and between the Company and the Bank of New York Mellon Trust Company N.A., as Trustee. For the three and nine months endedJune 30, 2019, the Company recognized interest expense of $6 million and $18 million related to the Convertible Notes, which includes $4 million and $12 million of amortization of the underwriting discount and issuance costs, respectively. For the three months ended June 30, 2018 and the period from December 16, 2017 through June 30, 2018, the Company recognized interest expense of $1 million related to the Convertible Notes, which mainly consisted of amortization of the underwriting discount.

The net carrying amount of the Convertible Notes for the periods indicated was as follows:

(In millions)	June 30, 2019			September 30, 2018
Principal	$	350		$	350
Less:
Unamortized debt discount	(76		)	(87		)
Unamortized issuance costs	(6		)	(7		)
Net carrying amount	$	268		$	256

The weighted average contractual interest rate of the Company’s outstanding debt as of June 30, 2019 and September 30, 2018 was 6.5% and 6.4%, respectively. The effective interest rate for the Term Loan Credit Agreement as of June 30, 2019 was not materially different than its contractual interest rate including adjustments related to hedging. The effective interest rate for the Convertible Notes as of June 30, 2019 was 9.2% reflecting the separation of the conversion feature in equity. The effective interest rates include interest on the debt and amortization of discounts and issuance costs.

For the period from October 1, 2017 through December 15, 2017 (Predecessor), contractual interest expense of $94 million was not recorded as interest expense, as it was not an allowed claim under the Bankruptcy Filing.

As of June 30, 2019, the Company was not in default under any of its debt agreements.

Capital Lease Obligations

Included in Other liabilities is $20 million and $31 million of capital lease obligations, net of imputed interest as of June 30, 2019 and September 30, 2018, respectively.

The Company outsources certain delivery services associated with its Enterprise Cloud and Managed Services, which include the sale of specified assets owned by the Company that are leased-back by the Company and accounted for as a capital lease. As of June 30, 2019 and September 30, 2018, capital lease obligations associated with this agreement were $16 million and $26 million, respectively.

9. Derivative Instruments and Hedging Activities

The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, "Derivatives and Hedging," ("ASC 815") and does not enter into derivatives for trading or speculative purposes.

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Interest Rate Contracts

The Company, from time-to-time, enters into interest rate swap contracts as a hedge against changes in interest rates on its variable rate loans outstanding.

On May 16, 2018, the Company entered into interest rate swap agreements with six counterparties, which fixed a portion of the variable interest due under its Term Loan Credit Agreement (the "Swap Agreements"). Under the terms of the Swap Agreements, which mature on December 15, 2022, the Company pays a fixed rate of 2.935% and receives a variable rate of interest based on one-month LIBOR. As of June 30, 2019, the total notional amount of the six Swap Agreements was $1,800 million.

The Swap Agreements are designated as cash flow hedges as they are deemed highly effective as defined under ASC 815. As a result, the unrealized gains or losses on these contracts are initially recorded in Accumulated other comprehensive (loss) income in the Condensed Consolidated Balance Sheets. As interest expense is recognized on the Term Loan Credit Agreement, the corresponding deferred gain or loss on the Swap Agreements is reclassified from Accumulated other comprehensive (loss) income to Interest expense in the Condensed Consolidated Statements of Operations. Based on the amount in Accumulated other comprehensive (loss) income at June 30, 2019, approximately $20 million would be reclassified into net income in the next twelve months as interest expense.

It is management's intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives.

Foreign Currency Forward Contracts

The Company, from time-to-time, utilizes foreign currency forward contracts primarily to hedge fluctuations associated with certain monetary assets and liabilities including receivables, payables and certain intercompany obligations. These foreign currency forward contracts are not designated for hedge accounting treatment. As a result, changes in the fair value of these contracts are recorded as a component of Other income (expense), net to offset the change in the value of the hedged assets and liabilities. As of June 30, 2019, the Company maintained open foreign currency forward contracts with a total notional value of $355 million, hedging the British Pound Sterling, Indian Rupee, Czech Koruna, Australian Dollar and Mexican Peso. The Company did not maintain any foreign currency forward contracts as of June 30, 2018.

Emergence Date Warrants

In accordance with the Plan of Reorganization, the Company issued warrants to purchase 5,645,200 shares of Company common stock to the holders of the Predecessor second lien obligations pursuant to a warrant agreement ("Emergence Date Warrants"). Each Emergence Date Warrant has an exercise price of $25.55 per share and expires December 15, 2022. The Emergence Date Warrants contain certain derivative features that require them to be classified as a liability and for changes in the fair value of the liability to be recognized in earnings each reporting period. On November 14, 2018, the Company's Board of Directors approved a warrant repurchase program, authorizing the Company to repurchase up to $15 million worth of the Emergence Date Warrants. None of the Emergence Date Warrants have been exercised or repurchased as of June 30, 2019.

The fair value of the Emergence Date Warrants was determined using a probability weighted Black-Scholes option pricing model. This model requires certain input assumptions including risk-free interest rates, volatility, expected life and dividend rates. Selection of these inputs involves significant judgment. The fair value of the Emergence Date Warrants as of June 30, 2019 and September 30, 2018 was determined using the input assumptions summarized below:

	June 30, 2019		September 30, 2018
Expected volatility	57.56	%	50.14	%
Risk-free interest rates	1.71	%	2.90	%
Contractual remaining life (in years)	3.46		4.21
Price per share of common stock	$11.91		$22.14

In determining the fair value of the Emergence Date Warrants, the dividend yield was assumed to be zero as the Company does not anticipate paying dividends.

The following table summarizes the fair value of the Company's derivatives on a gross basis segregated between those that are designated as hedging instruments and those that are not designated as hedging instruments:

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		June 30, 2019				September 30, 2018
(In millions)	Balance Sheet Caption	Asset		Liability		Asset		Liability
Derivatives Designated as Hedging Instruments:
Interest rate contracts	Other assets	$	—	$	—	$	3	$	—
Interest rate contracts	Other current liabilities	—		19		—		7
Interest rate contracts	Other liabilities	—		56		—		—
		—		75		3		7
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	Other current assets	2		—		—		—
Emergence Date Warrants	Other liabilities	—		6		—		34
		2		6		—		34
Total derivative fair value		$	2	$	81	$	3	$	41

The following tables provide information regarding the location and amount of pre-tax losses for derivatives designated as cash flow hedges:

	Three months ended June 30, 2019						Three months ended June 30, 2018
(In millions)	Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(59	)	$	(38	)	$	(56	)	$	(16	)
Impact of cash flow hedging relationships:
Loss recognized in AOCI - on interest rate swaps	—			(31		)	—			(17		)
Interest expense from AOCI reclassified	(2		)	2			(2		)	2

	Successor												Predecessor
	Nine months ended June 30, 2019						Period from December 16, 2017 through June 30, 2018						Period from October 1, 2017 through December 15, 2017
(In millions)	Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(177	)	$	(50	)	$	(112	)	$	(41	)	$	(14	)	$	658
Impact of cash flow hedging relationships:
Loss recognized in AOCI - on interest rate swaps	—			(78		)	—			(17		)	$	—		$	—
Interest expense from AOCI reclassified	(7		)	7			(2		)	2			$	—		$	—

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The following table provides information regarding the pre-tax gains (losses) for derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations:

		Successor											Predecessor
		Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
(In millions)	Location of Derivative Pre-tax Gain (Loss)
Emergence Date Warrants	Other income (expense), net	$	7		$	6	$	28		$	(9	)	$	—
Foreign exchange contracts	Other income (expense), net	(1		)	—		(1		)	—			—

The Company records its derivatives on a gross basis in the Condensed Consolidated Balance Sheets. The Company has master netting agreements with several of its financial institution counterparties. The following table provides information on the Company's derivative positions as if those subject to master netting arrangements were presented on a net basis, allowing for the right to offset by counterparty per the master netting agreements:

	June 30, 2019						September 30, 2018
(In millions)	Asset			Liability			Asset			Liability
Gross amounts recognized in the Condensed Consolidated Balance Sheet	$	2		$	81		$	3		$	41
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheet	(2		)	(2		)	(3		)	(3		)
Net amounts	$	—		$	79		$	—		$	38

10. Fair Value Measurements

Pursuant to the accounting guidance for fair value measurements, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The accounting guidance for fair value measurements also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into three levels that may be used to measure fair value:

Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable.

Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and September 30, 2018 were as follows:

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	June 30, 2019								September 30, 2018
	Fair Value Measurements Using								Fair Value Measurements Using
(In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Strategic investments	$	10	$	—	$	—	$	10	$	—	$	—	$	—	$	—
Other investments	—		—		—		—		2		2		—		—
Interest rate contracts	—		—		—		—		3		—		3		—
Foreign exchange contracts	2		—		2		—		—		—		—		—
Total assets	$	12	$	—	$	2	$	10	$	5	$	2	$	3	$	—
Liabilities:
Interest rate contracts	$	75	$	—	$	75	$	—	$	7	$	—	$	7	$	—
Spoken acquisition Earn-outs	5		—		—		5		15		—		—		15
Emergence Date Warrants	6		—		—		6		34		—		—		34
Total liabilities	$	86	$	—	$	75	$	11	$	56	$	—	$	7	$	49

Strategic investments

The Strategic Investment is valued using a discounted cash flow model which includes various unobservable inputs including cash flow projections, long-term growth rates, discount rates, and market comparable companies. The Strategic Investment is recorded in Other assets in the Condensed Consolidated Balance Sheets.

Other investments

Other investments classified as Level 1 assets are priced using quoted market prices for identical assets in active markets that are observable. Other investments are recorded in Other assets in the Condensed Consolidated Balance Sheets.

Interest rate and foreign exchange contracts

Interest rate and foreign exchange contracts classified as Level 2 assets and liabilities are not actively traded and are valued using pricing models that use observable inputs.

Spoken acquisition Earn-outs

The Spoken acquisition Earn-outs classified as Level 3 liabilities are measured using a probability-weighted discounted cash flow model. Significant unobservable inputs, which included probability of the achievement of the earn out targets and discount rate assumption, reflected the assumptions market participants would use in valuing these liabilities.

Emergence Date Warrants

Emergence Date Warrants classified as Level 3 liabilities are priced using the Black-Scholes option pricing model.

During the three months ended June 30, 2019 and 2018 (Successor), the nine months ended June 30, 2019 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor), there were no transfers between Level 1 and Level 2, or into and out of Level 3.

The following table summarizes the activity for the Company's Level 3 liabilities measured at fair value on a recurring basis:

(In millions)	Emergence Date Warrants			Spoken Acquisition Earn-outs			Strategic Investments		Total
Balance as of September 30, 2018	$	34		$	15		$	—	$	49
Strategic investments	—			—			10		10
Change in fair value(1)	(28		)	1			—		(27		)
Settlement	—			(11		)	—		(11		)
Balance as of June 30, 2019	$	6		$	5		$	10	$	21

⁽¹⁾ Changes in fair value of the Emergence Date Warrants are included in Other income (expense), net. Changes in fair value of the Spoken acquisition Earn-outs are included in Selling, general and administrative expense.

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Fair Value of Financial Instruments

The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, to the extent the underlying liability will be settled in cash, approximate their carrying values because of the short-term nature of these instruments.

As of June 30, 2019 and September 30, 2018, the estimated fair value of the Convertible Notes was determined based on the quoted price of the Convertible Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2.

The estimated fair values of amounts borrowed under the Company's other financing arrangements at June 30, 2019 and September 30, 2018 were estimated based on a Level 2 input based on a market approach utilizing market-clearing data on the valuation date in addition to bid/ask prices.

The estimated fair values of the amounts borrowed under the Company’s financing agreements at June 30, 2019 and September 30, 2018 are as follows:

	June 30, 2019				September 30, 2018
(In millions)	Principal amount		Fair value		Principal amount		Fair value
Term Loan Credit Agreement due December 15, 2024	$	2,881	$	2,764	$	2,903	$	2,932
Convertible 2.25% senior notes due June 15, 2023	350		305		350		357
Total debt	$	3,231	$	3,069	$	3,253	$	3,289

11. Income Taxes

The Company's effective income tax rate for the three and nine months endedJune 30, 2019 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Tax Cuts and Jobs Act ("the Act"), (7) the goodwill impairment charges recorded in the third quarter of fiscal 2019, (8) current period elections taken in submitted tax filings, and (9) foreign tax credits.

The Company's effective income tax rate for the three months ended June 30, 2018 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Act, and (7) foreign tax credits.

The Company's effective income tax rate for the period from December 16, 2017 through June 30, 2018 (Successor) differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) an increase in estimated current year tax loss, which is eliminated as part of the attribute reduction related to the cancellation of indebtedness income ("CODI"), and (7) the impact of the Act.

The Company's effective income tax rate for the period from October 1, 2017 through December 15, 2017 (Predecessor) differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local taxes, and (6) the impact of reorganization and fresh start adjustments.

During fiscal 2018, the Company centralized the management and ownership of certain intellectual property in a U.S. limited partnership, some of which was previously managed and owned by a Bermuda tax resident corporation. This action resulted in the utilization and recognition of previously unrecognized NOLs, the reversal of deferred tax liabilities established as part of fresh start accounting and the recognition of a deferred tax asset, cumulatively in the amount of $366 million.

The Company's U.S. federal net operating loss ("NOL") and tax credits have been eliminated due to the recognition of CODI in fiscal 2018.

On December 22, 2017, the Act was signed into law. The Act lowered the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. The Company has a September 30th tax year-end and therefore many of the tax law changes became effective in the first quarter of fiscal 2019. The Company has made a policy decision to treat Global Intangible Low-Taxed Income (“GILTI”) as a period cost. The Company benefits from the deduction attributable to Foreign Derived Intangible

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Income (“FDII”) and has taxable income attributable to GILTI, both of which impact the effective tax rate. During the three months ended December 31, 2018, Avaya completed its analysis of the impact of the Act as required by Staff Accounting Bulletin No. 118 issued by the SEC on December 22, 2017.

12. Benefit Obligations

The Company sponsors non-contributory defined benefit pension plans covering a portion of its U.S. employees and retirees, and post-retirement benefit plans covering a portion of its U.S. employees and retirees that include healthcare benefits and life insurance coverage. Certain non-U.S. operations have various retirement benefit programs covering substantially all of their employees. Some of these programs are considered to be defined benefit pension plans for accounting purposes.

The components of the pension and post-retirement net periodic benefit (credit) cost for the periods indicated are provided in the table below:

	Successor												Predecessor(1)
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
Pension Benefits - U.S.
Components of net periodic benefit (credit) cost
Service cost	$	1		$	1		$	3		$	2		$	1
Interest cost	10			9			29			19			22
Expected return on plan assets	(15		)	(17		)	(45		)	(35		)	(38		)
Amortization of actuarial loss	—			—			—			—			20
Net periodic benefit (credit) cost	$	(4	)	$	(7	)	$	(13	)	$	(14	)	$	5
Pension Benefits - Non-U.S.
Components of net periodic benefit cost
Service cost	$	2		$	1		$	5		$	3		$	2
Interest cost	2			3			7			5			3
Expected return on plan assets	—			—			—			—			(1		)
Amortization of actuarial loss	—			—			—			—			2
Net periodic benefit cost	$	4		$	4		$	12		$	8		$	6
Post-retirement Benefits - U.S.
Components of net periodic benefit cost
Service cost	$	—		$	1		$	1		$	1		$	—
Interest cost	4			4			11			7			3
Expected return on plan assets	(2		)	(3		)	(7		)	(5		)	(2		)
Amortization of prior service cost	—			—			—			—			(3		)
Amortization of actuarial loss	(1		)	—			(1		)	—			2
Net periodic benefit cost	$	1		$	2		$	4		$	3		$	—

⁽¹⁾ Excludes Plan of Reorganization related settlements that were recorded in Reorganization items, net in the Condensed Consolidated Statements of Operations.

The service components of net periodic benefit (credit) cost were recorded similar to compensation expense, while all other components were recorded in Other income (expense), net.

The Company's general funding policy with respect to its U.S. qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations, or to directly pay benefits where appropriate. Contributions to U.S. pension plans were $22 million for the nine months ended June 30, 2019, which represented the amounts required to satisfy the minimum statutory funding requirements in the U.S. For the remainder of fiscal 2019, the Company estimates that it will make contributions totaling $5 million to satisfy the minimum statutory funding requirements in the U.S.

Contributions to the non-U.S. pension plans were $19 million for the nine months ended June 30, 2019. For the remainder of fiscal 2019, the Company estimates that it will make contributions totaling $6 million for its non-U.S. plans.

In June 2019, the Company announced a change in medical benefits under the post-retirement medical plan for represented retirees as of April 30, 2019 and their eligible dependents. Effective January 1, 2020 the post-retirement medical plan coverage

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provided through the Company’s group plan will be replaced with medical coverage provided through the private and public insurance marketplace for the identified retirees. As a result, the U.S. represented retiree post-retirement plan was remeasured as of June 30, 2019, which resulted in the recognition of an $8 million increase to the accumulated benefit obligation with an offset to Accumulated other comprehensive (loss) income within the Condensed Consolidated Balance Sheets. The increase was mainly driven by changes in actuarial assumptions, partially offset by the impact of the change in medical coverage.

Most post-retirement medical benefits are not pre-funded. Consequently, the Company makes payments directly to the claims administrator as retiree medical benefit claims are disbursed. These payments are funded by the Company up to the maximum contribution amounts specified in the plan documents and contract with the Communications Workers of America and the International Brotherhood of Electrical Workers, and contributions from the participants, if required. During the nine months ended June 30, 2019, the Company made payments for retiree medical and dental benefits of $11 million and received a $3 million reimbursement from the represented employees' post-retirement health trust related to payments in prior periods. The Company estimates it will make contributions for retiree medical and dental benefits totaling $3 million for the remainder of fiscal 2019.

13. Share-based Compensation

Successor

The Company has a share-based compensation plan under which non-employee directors, employees of the Company or any of its affiliates, and certain consultants and advisors may be granted stock options, restricted stock, restricted stock units ("RSUs"), performance awards ("PRSUs") and other forms of awards granted or denominated in shares of the Company's common stock, as well as certain cash-based awards. Stock options and RSUs granted to employees generally vest ratably over a period of three years. PRSUs granted to certain senior executive employees vest at the end of the service period of three years. Awards granted to non-employee directors during fiscal 2019 vest immediately, while those granted during fiscal 2018 vested ratably over one year. As of the Emergence Date, forfeitures are accounted for as incurred.

Pre-tax share-based compensation expense for the three months ended June 30, 2019 and 2018 was $8 million and $7 million, respectively. Pre-tax share-based compensation expense for the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018 was $19 million and $13 million, respectively.

During the nine months ended June 30, 2019, the Company granted 1,686,004 RSUs with a weighted average grant date fair value of $15.46 per RSU. During the nine months ended June 30, 2019, there were 1,484,659 RSUs that vested with a weighted average grant date fair value of $15.49.

In February 2019, the Company granted 274,223 PRSUs with a grant date fair value of $11.18 per PRSU. These PRSUs will become eligible to vest if, prior to the vesting date of February 11, 2022, the average closing price of one share of the Company’s Common Stock for sixty consecutive days equals or exceeds $23.50. The grant date fair value of the award was estimated using a Monte Carlo simulation model that incorporated multiple valuation assumptions, including the probability of achieving the specified market condition. Additional assumptions used in the valuation included an expected volatility of 53.76% based on a blend of Company and peer group company historical data adjusted for the Company’s leverage, and a risk-free interest rate of 2.45% based on U.S. Treasury yields with a term equal to the vesting period. The grant date fair value of these PRSUs will be recognized as expense ratably over the vesting period and will not be adjusted in future periods for the success or failure to achieve the specified market condition.

In February 2019, the Company also granted 182,020 PRSUs which will vest based on the attainment of specified performance metrics for each of the next three separate fiscal years (collectively the "Performance Period"), and the Company's total shareholder return over the Performance Period as compared to the total shareholder return for a specified index of companies over the same period. The grant date fair value of the awards was estimated using a Monte Carlo simulation model that incorporated multiple valuation assumptions, including the probability of achieving the total shareholder return market condition. Other key assumptions used in the valuation included an expected volatility of 53.00% based on a blend of Company and peer group company historical data adjusted for the Company’s leverage, and a risk free interest rate of 2.46% based on U.S. Treasury yields with a term equal to the remaining Performance Period as of the grant date. During the Performance Period, the Company will adjust compensation expense for the awards based on its best estimate of attainment of the specified annual performance metrics. The cumulative effect on current and prior periods of a change in the estimated number of PRSUs that are expected to be earned during the Performance Period will be recognized as an adjustment to earnings in the period of the revision.

Predecessor

Prior to the Emergence Date, the Predecessor Company had granted share-based awards that were canceled upon emergence from bankruptcy. In conjunction with the cancellation, the Predecessor Company accelerated the unrecognized share-based compensation expense and recorded $3 million of compensation expense in the period from October 1, 2017 through December 15, 2017, principally reflected in Reorganization costs, net.

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14. Capital Stock

Preferred Stock

The Company's certificate of incorporation authorizes it to issue up to 55,000,000 shares of preferred stock with a par value of $0.01 per share. As of June 30, 2019 and September 30, 2018, there were no preferred shares issued or outstanding.

Common Stock

The Company's certificate of incorporation authorizes it to issue up to 550,000,000 shares of common stock with a par value of $0.01 per share. As of June 30, 2019, there were 110,887,967 shares issued and 110,875,287 shares outstanding with the remaining 12,680 shares distributable in accordance with the Plan of Reorganization. As of September 30, 2018, there were 110,218,653 shares issued and 110,012,790 shares outstanding with the remaining 205,863 shares distributable in accordance with the Plan of Reorganization.

On November 14, 2018, the Company's Board of Directors approved a warrant repurchase program, authorizing the Company to repurchase Emergence Date Warrants for an aggregate expenditure of up to $15 million. The repurchases may be made from time to time in the open market, through block trades or in privately negotiated transactions. The Company may adopt one or more purchase plans pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in order to implement the warrant repurchase program. The warrant repurchase program does not obligate the Company to purchase any warrants and may be terminated, increased or decreased by the Board of Directors in its discretion at any time. As of June 30, 2019, there were no warrant repurchases under the program.

15. (Loss) Earnings Per Common Share

Basic (loss) earnings per share is calculated by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share reflects the potential dilution that would occur if equity awards granted under the Company's various share-based compensation plans were vested or exercised; if the Company's Convertible Notes or the warrants the Company sold to purchase up to 12.6 million shares of its common stock in connection with the issuance of the Convertible Notes ("Call Spread Warrants") were exercised; and/or if the Emergence Date Warrants were exercised, resulting in the issuance of common shares that would participate in the earnings of the Company.

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The following table sets forth the calculation of net (loss) income attributable to common shareholders and the computation of basic and diluted (loss) earnings per share for the periods indicated:

	Successor												Predecessor
(In millions, except per share amounts)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
(Loss) earnings per share:
Numerator
Net (loss) income	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977
Dividends and accretion to preferred stockholders	—			—			—			—			(6		)
Undistributed (loss) income	(633		)	(88		)	(637		)	19			2,971
Percentage allocated to common stockholders(1)	100.0		%	100.0		%	100.0		%	100.0		%	86.9		%
Numerator for basic and diluted (loss) earnings per common share	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,582
Denominator
Denominator for basic (loss) earnings per weighted average common shares	111.0			109.8			110.7			109.8			497.3
Effect of dilutive securities
Restricted stock units	—			—			—			1.2			—
Denominator for diluted (loss) earnings per weighted average common shares	111.0			109.8			110.7			111.0			497.3
(Loss) earnings per common share
Basic	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
Diluted	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
(1) Basic weighted average common stock outstanding	111.0			109.8			110.7			109.8			497.3
Basic weighted average common stock and common stock equivalents (preferred shares)	111.0			109.8			110.7			109.8			572.4
Percentage allocated to common stockholders	100.0		%	100.0		%	100.0		%	100.0		%	86.9		%

For the three and nine months endedJune 30, 2019, the Company excluded 1.0 million stock options, 3.6 million RSUs and 5.6 million Emergence Date Warrants from the diluted loss per share calculation as their effect would have been anti-dilutive. The Company also excluded 0.5 million PRSUs from the diluted loss per share calculation as their performance metrics have not yet been attained. The Company’s Convertible Notes and Call Spread Warrants were also excluded for the three and nine months endedJune 30, 2019 as discussed in more detail below. For the three months ended June 30, 2018, the Company excluded 1.1 million stock options, 3.3 million restricted stock units and 5.6 million Emergence Date Warrants from the diluted loss per share calculation as their effect would have been anti-dilutive. For the period from December 16, 2017 through June 30, 2018, the Company excluded 1.1 million stock options and 5.6 million Emergence Date Warrants from the diluted earnings per share calculation as their effect would have been anti-dilutive.

For purposes of considering the Convertible Notes in determining diluted (loss) earnings per share, the Company has the ability and current intent to settle conversions of the Convertible Notes through combination settlement by repaying the principal portion in cash and any excess of the conversion value over the principal amount (the "Conversion Premium") in shares of the Company's common stock. Therefore, only the impact of the Conversion Premium will be included in diluted weighted average shares outstanding using the treasury stock method. Since the Convertible Notes were out of the money and anti-dilutive as of June 30, 2019 and 2018, they were excluded from the diluted loss per share calculation for the three months ended June 30, 2019 and 2018, the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018. The Call Spread Warrants will not be considered in calculating diluted weighted average shares outstanding until the price per share of the Company’s common stock exceeds the strike price of $37.3625 per share. When the price per share of the Company’s common stock exceeds the strike price per share of the Call Spread Warrants, the effect of the additional shares that may be issued upon exercise of the Call Spread Warrants will be included in diluted weighted average shares outstanding using the treasury stock method.

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16. Operating Segments

The Products & Solutions segment primarily develops, markets, and sells unified communications and contact center solutions, offered on premises, in the cloud, or as a hybrid solution. These integrate multiple forms of communications, including telephony, email, instant messaging and video. The Services segment develops, markets and sells comprehensive end-to-end global service offerings that enable customers to evaluate, plan, design, implement, monitor, manage and optimize complex enterprise communications networks.

The Company’s chief operating decision maker makes financial decisions and allocates resources based on segment profit information obtained from the Company’s internal management systems. Management does not include in its segment measures of profitability selling, general and administrative expenses, research and development expenses, amortization of intangible assets, and certain discrete items, such as fair value adjustments recognized upon emergence from bankruptcy, charges relating to restructuring actions, impairment charges, and merger-related costs as these costs are not core to the measurement of segment performance, but rather are controlled at the corporate level.

Summarized financial information relating to the Company's operating segments is shown in the following table for the periods indicated:

	Successor												Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
REVENUE
Products & Solutions	$	298		$	322		$	913		$	716		$	253
Services	422			433			1,269			967			351
Unallocated Amounts (1)	(3		)	(63		)	(18		)	(171		)	—
	$	717		$	692		$	2,164		$	1,512		$	604
GROSS PROFIT
Products & Solutions	$	189		$	210		$	587		$	473		$	169
Services	249			257			759			582			196
Unallocated Amounts (2)	(48		)	(115		)	(163		)	(302		)	(3		)
	390			352			1,183			753			362
OPERATING EXPENSES
Selling, general and administrative	253			281			761			613			264
Research and development	49			51			154			110			38
Amortization of intangible assets	41			39			122			86			10
Impairment charges	659			—			659			—			—
Restructuring charges, net	1			30			12			80			14
	1,003			401			1,708			889			326
OPERATING (LOSS) INCOME	(613		)	(49		)	(525		)	(136		)	36
INTEREST EXPENSE, OTHER INCOME (EXPENSE), NET AND REORGANIZATION ITEMS, NET	(47		)	(19		)	(142		)	(80		)	3,400
(LOSS) INCOME BEFORE INCOME TAXES	$	(660	)	$	(68	)	$	(667	)	$	(216	)	$	3,436

⁽¹⁾ Unallocated amounts in Revenue represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

⁽²⁾   Unallocated amounts in Gross Profit include the fair value adjustments recognized upon emergence from bankruptcy and excluded from segment gross profit; the effect of the amortization of technology intangibles; and costs that are not core to the measurement of segment management’s performance, but rather are controlled at the corporate level.

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17. Accumulated Other Comprehensive (Loss) Income

The components of Accumulated other comprehensive (loss) income for the periods indicated were as follows:

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Income (Loss)
Balance as of March 31, 2019 (Successor)	$	51		$	(12	)	$	(33	)	$	—	$	6
Other comprehensive loss before reclassifications	(8		)	(10		)	(31		)	—		(49		)
Amounts reclassified to earnings	—			—			2			—		2
Benefit from income taxes	2			—			7			—		9
Balance as of June 30, 2019 (Successor)	$	45		$	(22	)	$	(55	)	$	—	$	(32	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Income (Loss)
Balance as of September 30, 2018 (Successor)	$	51		$	(31	)	$	(2	)	$	—	$	18
Other comprehensive (loss) income before reclassifications	(8		)	9			(78		)	—		(77		)
Amounts reclassified to earnings	—			—			7			—		7
Benefit from income taxes	2			—			18			—		20
Balance as of June 30, 2019 (Successor)	$	45		$	(22	)	$	(55	)	$	—	$	(32	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items		Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Loss
Balance as of March 31, 2018 (Successor)	$	—	$	(25	)	$	—		$	—	$	(25	)
Other comprehensive loss before reclassifications	—		(4		)	(17		)	—		(21		)
Amounts reclassified to earnings	—		—			2			—		2
Benefit from income taxes	—		—			3			—		3
Balance as of June 30, 2018 (Successor)	$	—	$	(29	)	$	(12	)	$	—	$	(41	)

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(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other			Accumulated Other Comprehensive (Loss) Income
Balance as of September 30, 2017 (Predecessor)	$	(1,375	)	$	(72	)	$	—		$	(1	)	$	(1,448	)
Other comprehensive (loss) income before reclassifications	(24		)	3			—			—			(21		)
Amounts reclassified to earnings	16			—			—			—			16
Pension settlement	721			—			—			—			721
Provision for income taxes	(58		)	—			—			—			(58		)
Balance as of December 15, 2017 (Predecessor)	(720		)	(69		)	—			(1		)	(790		)
Elimination of Predecessor Company Accumulated other comprehensive loss	720			69			—			1			790
Balance as of December 15, 2017 (Predecessor)	$	—		$	—		$	—		$	—		$	—
Balance as of December 16, 2017 (Successor)	$	—		$	—		$	—		$	—		$	—
Other comprehensive loss before reclassifications	—			(29		)	(17		)	—			(46		)
Amounts reclassified to earnings	—			—			2			—			2
Benefit from income taxes	—			—			3			—			3
Balance as of June 30, 2018 (Successor)	$	—		$	(29	)	$	(12	)	$	—		$	(41	)

The amounts reclassified out of Accumulated other comprehensive (loss) income for the unamortized pension, post-retirement and postemployment benefit-related items are recorded in Other income (expense), net in the Condensed Consolidated Statement of Operations. The amounts reclassified out of Accumulated other comprehensive (loss) income for the interest rate swaps are recorded in Interest expense in the Condensed Consolidated Statement of Operations.

18. Related Party Transactions

The Company's Board of Directors is comprised of seven directors, including the Company's Chief Executive Officer and six non-employee directors. On March 18, 2019, Jacqueline E. Yeaney joined the Company's Board of Directors, filling the previous vacancy on the Company's Board of Directors caused by the resignation of Ronald A. Rittenmeyer effective as of April 30, 2018.

Specific Arrangements Involving the Successor Company’s Current Directors and Executive Officers

William D. Watkins is a Director and Chair of the Board of Directors of Avaya Holdings and serves on the board of directors of Flex Ltd., an electronics design manufacturer. For the nine months ended June 30, 2019 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor), and the period from October 1, 2017 through December 15, 2017 (Predecessor), the Company purchased goods and services from subsidiaries of Flex Ltd. of $22 million, $13 million, and $6 million, respectively. As of June 30, 2019 (Successor) and September 30, 2018 (Successor), the Company had outstanding accounts payable due to Flex Ltd. of $18 million and $4 million, respectively.

19. Commitments and Contingencies

Legal Proceedings

General

The Company records accruals for legal contingencies to the extent that it has concluded that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters specifically described below because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the proceeding is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties (including where it is uncertain how liability, if any, will be shared among multiple defendants); or (vii) there is a wide range of potential outcomes.

In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations and proceedings, including, but not limited to, those identified below, relating to intellectual property, commercial, employment, environmental and regulatory matters.

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Based on the Company's experience, management believes that the damages amounts claimed in a case are not a meaningful indicator of the potential liability. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of cases. The Company believes that it has meritorious defenses in connection with its current lawsuits and material claims and disputes.

In the opinion of the Company's management based upon information currently available to the Company, while the outcome of these lawsuits, claims and disputes is uncertain, the likely results of these lawsuits, claims and disputes are not expected, either individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations or cash flows, although the effect could be material to the Company's consolidated results of operations or consolidated cash flows for any interim reporting period.

During the three months ended June 30, 2019 and 2018 (Successor), the nine months ended June 30, 2019 (Successor), and the period from December 16, 2017 through June 30, 2018 (Successor), there were no costs incurred in connection with the resolution of legal matters other than those incurred in the ordinary course of business. During the period from October 1, 2017 through December 15, 2017 (Predecessor), costs incurred in connection with the resolution of certain legal matters was $37 million.

Intellectual Property and Commercial Disputes

In January 2010, SAE Power Incorporated and SAE Power Company (collectively, "SAE") filed a complaint in the New Jersey Superior Court asserting various claims including breach of contract, unjust enrichment, promissory estoppel and breach of the covenant of good faith and fair dealing arising out of Avaya’s relationship with SAE as a supplier of various power supply products. SAE has since asserted additional claims against Avaya for fraud, negligent misrepresentation, misappropriation of trade secrets and civil conspiracy. SAE sought to recover for alleged losses stemming from Avaya’s termination of its power supply purchases from SAE, including for Avaya’s alleged disclosure of SAE’s alleged trade secret and/or confidential information to another power supply vendor. On July 19, 2016, the Court entered an order granting Avaya’s motion for partial summary judgment, dismissing certain of SAE’s claims regarding the alleged disclosure of trade secrets. In January 2017, the Company filed a Notice of Suggestion of Pendency of Bankruptcy, which informed the Court of the Company’s voluntary bankruptcy petition filing and stay of proceedings. SAE filed a proof of claim in the Bankruptcy Court. On September 28, 2017, the Company filed a motion in the Bankruptcy Court seeking to estimate SAE’s claim, and the estimation hearing took place on February 15, 2018. On June 12, 2018, the Bankruptcy Court entered an Order estimating SAE’s pre-petition misappropriation claim in the amount of $1.21 million plus interest, its fraud claim at $0 million and declined to estimate SAE’s breach of contract claim, leaving it to be resolved through the bankruptcy claims allowance process. Once the stay of proceedings is lifted, SAE may pursue its liability claims against Avaya in the New Jersey state court action, subject to the estimation Order of the Bankruptcy Court. On June 22, 2018, SAE filed a Notice of Appeal challenging the estimation Order, which was denied by the United States District Court on May 6, 2019. In July 2019, the Company and SAE reached a settlement of the dispute. SAE will receive an allowed unsecured claim and distribution in accordance with the general unsecured claims procedure in the Company's Plan of Reorganization, and Avaya will be dismissed from the state court action.

In the ordinary course of business, the Company is involved in litigation alleging it has infringed upon third parties’ intellectual property rights, including patents and copyrights; some litigation may involve claims for infringement against customers, distributors and resellers by third parties relating to the use of Avaya’s products, as to which the Company may provide indemnifications of varying scope to certain parties. The Company is also involved in litigation pertaining to general commercial disputes with customers, suppliers, vendors and other third parties including royalty disputes. These matters are ongoing and the outcomes are subject to inherent uncertainties. As a result, the Company cannot be assured that any such matter will not have a material adverse effect on its financial position, results of operations or cash flows.

Product Warranties

The Company recognizes a liability for the estimated costs that may be incurred to remedy certain deficiencies of quality or performance of the Company’s products. These product warranties extend over a specified period of time, generally ranging up to two years from the date of sale depending upon the product subject to the warranty. The Company accrues a provision for estimated future warranty costs based upon the historical relationship of warranty claims to sales. The Company periodically reviews the adequacy of its product warranties and adjusts, if necessary, the warranty percentage and accrued warranty reserve, which is included in other current and non-current liabilities in the Condensed Consolidated Balance Sheets, for actual experience. As of June 30, 2019 and September 30, 2018, the amount reserved was $1 million and $2 million, respectively.

Guarantees of Indebtedness and Other Off-Balance Sheet Arrangements

Letters of Credit and Guarantees

The Company provides guarantees, letters of credit and surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company's performance in accordance with contractual or legal obligations. As of June 30, 2019, the maximum potential payment obligation with regards to letters of credit, guarantees

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and surety bonds was $70 million. The outstanding letters of credit are collateralized by restricted cash of $4 million included in Other assets on the Condensed Consolidated Balance Sheets as of June 30, 2019.

Purchase Commitments and Termination Fees

The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, to manage manufacturing lead times and to help assure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that allow them to produce and procure inventory based upon forecasted requirements provided by the Company. If the Company does not meet these specified purchase commitments, it could be required to purchase the inventory, or in the case of certain agreements, pay an early termination fee. Historically, the Company has not been required to pay a charge for not meeting its designated purchase commitments with these suppliers, but has been obligated to purchase certain excess inventory levels from its outsourced manufacturers due to actual sales of product varying from forecast and due to transition of manufacturing from one vendor to another.

The Company’s outsourcing agreements with its most significant contract manufacturers automatically renew in July and September for successive periods of twelve months each, subject to specific termination rights for the Company and the contract manufacturers. All manufacturing of the Company’s products is performed in accordance with either detailed requirements or specifications and product designs furnished by the Company, and is subject to rigorous quality control standards.

Transactions with Nokia

Pursuant to the Contribution and Distribution Agreement effective October 1, 2000 (the "Contribution and Distribution Agreement"), Lucent Technologies, Inc. (now Nokia) contributed to the Company substantially all of the assets, liabilities and operations associated with its enterprise networking businesses (the "Company’s Businesses") and distributed the Company’s stock pro-rata to the shareholders of Lucent ("distribution"). The Contribution and Distribution Agreement, among other things, provides that, in general, the Company will indemnify Nokia for all liabilities including certain pre-distribution tax obligations of Nokia relating to the Company’s Businesses and all contingent liabilities primarily relating to the Company’s Businesses or otherwise assigned to the Company. In addition, the Contribution and Distribution Agreement provides that certain contingent liabilities not allocated to one of the parties will be shared by Nokia and the Company in prescribed percentages. The Contribution and Distribution Agreement also provides that each party will share specified portions of contingent liabilities based upon agreed percentages related to the business of the other party that exceed $50 million. The Company is unable to determine the maximum potential amount of other future payments, if any, that it could be required to make under this agreement.

In addition, in connection with the distribution, the Company and Lucent entered into a Tax Sharing Agreement effective October 1, 2000 (the "Tax Sharing Agreement") that governs Nokia’s and the Company’s respective rights, responsibilities and obligations after the distribution with respect to taxes for the periods ending on or before the distribution. Generally, pre-distribution taxes or benefits that are clearly attributable to the business of one party will be borne solely by that party and other pre-distribution taxes or benefits will be shared by the parties based on a formula set forth in the Tax Sharing Agreement. The Company may be subject to additional taxes or benefits pursuant to the Tax Sharing Agreement related to future settlements of audits by state and local and foreign taxing authorities for the periods prior to the Company’s separation from Nokia.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise indicates, as used in this "Management’s Discussion and Analysis of Financial Condition and Results of Operations," the terms "we," "us," "our," "the Company," "Avaya" and similar terms refer to Avaya Holdings Corp. and its consolidated subsidiaries. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our Consolidated Financial Statements and other financial information for the fiscal year ended September 30, 2018, which were included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 21, 2018.

Our accompanying unaudited interim Condensed Consolidated Financial Statements as of June 30, 2019 (Successor) and for the three and nine months endedJune 30, 2019 (Successor), the three months ended June 30, 2018 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor) have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial statements. In our opinion, the unaudited interim Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, as well as fresh start and reorganization adjustments, necessary to state fairly the financial position, results of operations and cash flows for the periods indicated.

The matters discussed in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See "Cautionary Note Regarding Forward-Looking Statements" at the end of this discussion.

Overview

Avaya is a global leader in digital communications products, solutions and services for businesses of all sizes. We enable organizations around the globe to succeed by creating intelligent communications experiences for customers and employees. Avaya builds open, converged and innovative solutions to enhance and simplify communications and collaboration in the cloud, on-premises or a hybrid of both. Our global, experienced team of professionals delivers award-winning services from initial planning and design, to seamless implementation and integration, to ongoing managed operations, optimization, training and support. Our business has two operating segments: Products & Solutions and Services.

Products & Solutions

Products & Solutions encompasses our unified communications and contact center platforms, applications and devices.

Unified Communications ("UC"): Avaya unifies communications, helping companies increase employee productivity, improve customer service and reduce costs. Avaya embeds communications directly into the applications, browsers and devices employees use every day to create a single, powerful gateway for voice, video, messaging, conferencing and collaboration. We give people a natural, efficient, and flexible way to connect, engage, respond, and share - where and how they want - for better business results.

Avaya offers an open, extensible development platform, so that customers and third parties can easily create custom applications and automated workflows for their unique needs, integrating Avaya’s capabilities into the customer's existing infrastructure and business applications.

Contact Center ("CC"): Avaya’s industry-leading omnichannel contact center solutions enable customers to build a customized portfolio of applications, driving stronger customer engagement and higher customer lifetime value. Our reliable, secure and scalable communications solutions include voice, email, chat, social media, video, performance management and ease of third-party integration that can improve customer service and help companies compete more effectively.

Avaya also focuses on ensuring an outstanding experience for mobile callers by integrating transformative technologies, including Artificial Intelligence, big data analytics and cybersecurity into our contact center solutions. As organizations use these solutions to gain a deeper understanding of their customer needs, we believe that their teams become more efficient and effective and their customer loyalty grows.

Both UC and CC are supported by our portfolio of innovative business phones and multimedia devices, which is one of the broadest in the industry. Avaya brings consumer technology to the employee desktop in a way that can help our customers enhance customer service, internal and external collaboration, and employee productivity. Customers experience seamless audio and video capabilities for both Avaya and approved third-party UC platforms via open Session Initiation Protocol ("SIP") devices. SIP is used for signaling and controlling multi-media communication sessions in applications of Internet telephony for voice and video calls, along with integration with numerous apps that help connect and accelerate business. Developers can easily customize capabilities for their specific needs with our client Software Development Kit.

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Services

Services consists of three business areas: Global Support Services, Enterprise Cloud and Managed Services and Professional Services.

• Global Support Servicesfeatures offerings that address the risk of system outages and also help businesses protect their technology investments. We help our customers maintain their competitiveness through proactive problem prevention, rapid resolution and continual solution optimization. The majority of our revenue in this business is recurring in nature.

• Enterprise Cloud and Managed Services enables customers to take advantage of our technology via the cloud, on-premises, or a hybrid of both, depending on the solution and the needs of the customer. The majority of our revenue in this business is recurring in nature and based on multi-year services contracts.

• Professional Services enables businesses worldwide to take full advantage of their solution investments to drive measurable business results. Our expert consultants and experienced engineers work with clients as a strategic partner along each step of the solution lifecycle to deliver services that drive business transformation and expand ongoing value. The majority of our revenue in this business is one-time in nature.

Together, these comprehensive services enable clients to leverage communications technology to help them maximize their business results. Our global team of professionals delivers services from initial planning and design, to implementation and integration, to ongoing managed operations, optimization, training and support. We help our customers use communications to minimize the risk of outages, enable employee productivity and deliver a differentiated customer experience.

Our services teams also help our clients transition at their desired pace to next generation communications technology solutions, either via the cloud, on-premises, or a hybrid of both. Customers can choose various levels of support for their communications solutions, including deployment, training, monitoring, troubleshooting and optimization, and more. Our proactive, preventative system performance monitoring can quickly identify and resolve issues. Remote diagnostics and resolutions rapidly fix existing problems and avoid potential issues, helping our customers to save time and reducing the risk of an outage.

Emergence from Bankruptcy

On January 19, 2017 (the "Petition Date"), Avaya Holdings Corp., together with certain of its affiliates (collectively, the "Debtors"), filed voluntary petitions for relief (the "Bankruptcy Filing") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").

On November 28, 2017, the Bankruptcy Court entered an order confirming the Second Amended Joint Plan of Reorganization filed by the Debtors on October 24, 2017 (the "Plan of Reorganization"). On December 15, 2017 (the "Emergence Date"), the Plan of Reorganization became effective and the Debtors emerged from bankruptcy.

Beginning on the Emergence Date, the Company applied fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the Condensed Consolidated Financial Statements after December 15, 2017 are not comparable with the Condensed Consolidated Financial Statements on or prior to that date.

Factors and Trends Affecting Our Results of Operations

There are a number of trends and uncertainties affecting our business. For example, we are dependent on general economic conditions and the willingness of our customers to invest in technology. In addition, instability in the geopolitical environment of our customers, instability in the global credit markets and other disruptions put pressure on the global economy causing uncertainties. Our business is also affected by changes in foreign currency exchange rates. We believe these uncertainties have impacted our customers’ willingness to spend on IT and the manner in which they procure such technologies and services. This includes delays or rejection of capital projects, including the implementation of our products and services.

As a result of a growing market trend preferring cloud consumption, more customers are exploring subscription and pay-per-use based models, rather than CapEx models, for procuring technology. The shift to subscription and pay-per-use models enables customers to manage costs and efficiencies by paying a subscription or a per minute or per message fee for business communications services rather than purchasing the underlying products and services, infrastructure and personnel, which are owned and managed by the equipment vendor or a cloud and managed services provider. We believe the market trend toward these flexible consumption models will continue as we see an increasing number of opportunities and requests for proposals based on subscription and pay-per-use models. This trend has driven an increase in the proportion of total Company revenues attributable to software and services. In addition, we believe customers are moving away from owned and operated infrastructure, preferring cloud offerings and virtualized server defined networks, which reduce our associated maintenance

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support opportunities. We continue to evolve into a software and services business and focus our go-to-market efforts by introducing new solutions and innovations, particularly on workflow automation, multi-channel customer engagement and cloud-enabled communications applications. The Company is focused on growing products and services with a recurring revenue stream. Recurring revenue includes products and services that are delivered pursuant to multi-period contracts including revenue recurring from sales of software, maintenance, Cloud, and Avaya private cloud services, which was recently renamed Enterprise Cloud and Managed Services.

Despite the benefits of a robust indirect channel, which include expanding our sales reach, our channel partners have direct contact with our customers that may foster independent relationships between them and a loss of certain services agreements for us. We have been able to offset these impacts by focusing on utilizing partners in a sales agent relationship, whereby partners perform selling activities but the contract remains with Avaya. We are also offering higher-value services in support of our software offerings, such as professional services and cloud-managed services, which are not traditionally provided by our channel partners.

The Company has maintained its focus on profitability levels and investing in future results. As the Company continues its transformation to a software and service-led organization, it has implemented programs designed to streamline its operations, generate cost savings and eliminate overlapping processes and resources. These cost savings programs include: (1) reducing headcount, (2) eliminating real estate costs associated with unused or under-utilized facilities and (3) implementing gross margin improvement and other cost reduction initiatives. The Company continues to evaluate opportunities to streamline its operations and identify cost savings globally and may take additional restructuring actions in the future. The costs of those actions could be material.

Financial Results Summary

Our financial results for the period from October 1, 2017 through December 15, 2017 are referred to as those of the "Predecessor" period. Our financial results for the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018 are referred to as those of the "Successor" period. Our results of operations as reported in our unaudited interim Condensed Consolidated Financial Statements are in accordance with GAAP and therefore reported separately for each of these periods. Although GAAP requires that we report on our results for the period from October 1, 2017 through December 15, 2017 and the period from December 16, 2017 through June 30, 2018 separately, management views and assesses the Company’s operating results for the nine months ended June 30, 2018 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison of our results to the current period.

The Company cannot adequately compare the operating results of the period from December 16, 2017 through June 30, 2018 against the current period reported in its Condensed Consolidated Financial Statements without combining it with the period from October 1, 2017 through December 15, 2017 and does not believe that reviewing the results of this period in isolation would be useful in identifying any trends in or reaching any conclusions regarding the Company’s overall operating performance. Management believes that the key performance metrics such as revenue, gross margin and operating income (loss) for the Successor period when combined with the Predecessor period provides more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our Condensed Consolidated Financial Statements in accordance with GAAP, the table and discussion below also present the combined results for the nine months ended June 30, 2018.

The combined results for the nine months ended June 30, 2018, which we refer to herein as results for the "nine months ended June 30, 2018," represent the sum of the reported amounts for the Predecessor period from October 1, 2017 through December 15, 2017 and the Successor period from December 16, 2017 through June 30, 2018. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared as pro forma results under applicable regulations. The combined operating results may not reflect the actual results we would have achieved absent our emergence from bankruptcy and may not be indicative of future results.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers ("ASU 2014-09")." This standard superseded most of the previous revenue recognition guidance under GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue recognition. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. Subsequently, the FASB issued several standards that clarified certain aspects of ASU 2014-09 but did not significantly change the original standard. The Company adopted ASU 2014-09 and its related amendments (collectively "ASC 606") as of October 1, 2018 using the modified retrospective transition method. Refer to Note 2, "Recent Accounting Pronouncements" and Note 3, "Revenue Recognition" to our Condensed Consolidated Financial Statements for disclosures related to the adoption of ASC 606 and an updated accounting policy related to revenue recognition and contract costs.

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With the adoption of ASC 606, sales that include professional services, are generally recognized as the services are performed as opposed to upon completion and acceptance of the promised services. Additionally, when such arrangements also include products, certain products revenue is recognized when the products are delivered as opposed to upon completion and acceptance of the related services. Revenue recognition related to stand-alone product shipments, maintenance services, and certain cloud offerings remains substantially unchanged. In addition to the impacts on revenue recognition, the standard requires incremental contract acquisition costs (primarily sales commissions) to be capitalized and amortized over the term of the related performance obligation as opposed to expensed as incurred. The actual impacts are dependent upon contract-specific terms.

At the beginning of fiscal 2019, the Company’s management proactively aligned its internal key performance indicators and its incentive compensation plans to drive performance under ASC 606. Due to these operational changes, the Company’s results for the nine months ended June 30, 2019 on an ASC 605 basis (see Note 3, “Revenue Recognition,” to our unaudited interim Condensed Consolidated Financial Statements) are not directly comparable to the Company’s results for the nine months ended June 30, 2018, which are also on an ASC 605 basis. In addition to the impact on revenue, these operational changes also had a corresponding impact on the Company’s cash flow performance, as revenue recognition now precedes customer billing and cash collection in many cases. The Company anticipates that the differences resulting from these operational changes will normalize as services engagements reach completion milestones in subsequent reporting periods.

The following table displays our consolidated net (loss) income for the periods indicated:

	Successor												Predecessor			Non-GAAP Combined
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017			Nine months ended June 30, 2018
REVENUE
Products	$	297		$	300		$	908		$	664		$	253		$	917
Services	420			392			1,256			848			351			1,199
	717			692			2,164			1,512			604			2,116
COSTS
Products:
Costs	109			114			329			257			84			341
Amortization of technology intangible assets	43			44			130			92			3			95
Services	175			182			522			410			155			565
	327			340			981			759			242			1,001
GROSS PROFIT	390			352			1,183			753			362			1,115
OPERATING EXPENSES
Selling, general and administrative	253			281			761			613			264			877
Research and development	49			51			154			110			38			148
Amortization of intangible assets	41			39			122			86			10			96
Impairment charges	659			—			659			—			—			—
Restructuring charges, net	1			30			12			80			14			94
	1,003			401			1,708			889			326			1,215
OPERATING (LOSS) INCOME	(613		)	(49		)	(525		)	(136		)	36			(100		)
Interest expense	(59		)	(56		)	(177		)	(112		)	(14		)	(126		)
Other income (expense), net	12			37			35			32			(2		)	30
Reorganization items, net	—			—			—			—			3,416			3,416
(LOSS) INCOME BEFORE INCOME TAXES	(660		)	(68		)	(667		)	(216		)	3,436			3,220
Benefit from (provision for) income taxes	27			(20		)	30			235			(459		)	(224		)
NET (LOSS) INCOME	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977		$	2,996

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The following table displays the impact of the fair value adjustments resulting from the Company's application of fresh start accounting upon emergence from bankruptcy, excluding those related to the amortization of intangible assets, on the Company's operating (loss) income for the periods indicated:

(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018
REVENUE
Products	$	(1	)	$	(22	)	$	(5	)	$	(52	)
Services	(2		)	(41		)	(13		)	(119		)
	(3		)	(63		)	(18		)	(171		)
COSTS
Products	1			2			4			16
Services	1			4			11			23
	2			6			15			39
GROSS PROFIT	(5		)	(69		)	(33		)	(210		)
OPERATING EXPENSES
Selling, general and administrative	(2		)	2			—			1
Research and development	1			—			3			—
	(1		)	2			3			1
OPERATING (LOSS) INCOME	$	(4	)	$	(71	)	$	(36	)	$	(211	)

Three Months Ended June 30, 2019 Compared with the Three Months Ended June 30, 2018 Results

Revenue

Revenue for the three months ended June 30, 2019 was $717 million compared to $692 million for the three months ended June 30, 2018. The increase was primarily driven by a lower impact of applying fresh start accounting upon emergence from bankruptcy, which resulted in the recognition of deferred revenue at fair value and lower revenue in subsequent periods and the favorable impact of adopting ASC 606 ($45 million). The increase was partially offset by lower demand for the Company’s unified communications and contact center products; lower professional services revenue mainly driven by the operational changes implemented in the current year to drive performance under ASC 606; a decline in maintenance services revenue due to declines in Products & Solutions revenue in prior periods; and the unfavorable impact of foreign currency exchange rates.

The following table displays revenue and the percentage of revenue to total sales by operating segment for the periods indicated:

							Percentage of Total Revenue						Yr. to Yr. Percentage Change, net of Foreign Currency Impact
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Three months ended June 30, 2019		Three months ended June 30, 2018		Yr. to Yr. Percentage Change
Products & Solutions	$	298		$	322		41	%	46	%	(7	)%	(6	)%
Services	422			433			59	%	63	%	(3	)%	(1	)%
Unallocated amounts	(3		)	(63		)	—	%	(9	)%	(1)		(1)
Total revenue	$	717		$	692		100	%	100	%	4	%	5	%

⁽¹⁾  Not meaningful

Products & Solutions revenue for the three months ended June 30, 2019 was $298 million compared to $322 million for the three months ended June 30, 2018. The decrease was primarily attributable to lower unified communications and contact center revenue and the unfavorable impact of foreign currency exchange rates, partially offset by the favorable impact of adopting ASC 606 ($26 million).

Services revenue for the three months ended June 30, 2019 was $422 million compared to $433 million for the three months ended June 30, 2018. The decrease was primarily due to lower professional services revenue mainly driven by the operational changes implemented in the current year to drive performance under ASC 606; a decline in maintenance services revenue due

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to declines in Products & Solutions revenue in prior periods; and the unfavorable impact of foreign currency exchange rates, partially offset by the favorable impact of adopting ASC 606 ($19 million).

Unallocated amounts for the three months ended June 30, 2019 and 2018 represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

The following table displays revenue and the percentage of revenue to total sales by location for the periods indicated:

					Percentage of Total Revenue						Yr. to Yr. Percentage Change, net of Foreign Currency Impact
(In millions)	Three months ended June 30, 2019		Three months ended June 30, 2018		Three months ended June 30, 2019		Three months ended June 30, 2018		Yr. to Yr. Percentage Change
U.S.	$	392	$	356	55	%	51	%	10	%	10	%
International:
EMEA	183		193		25	%	28	%	(5	)%	(2	)%
APAC - Asia Pacific	85		81		12	%	12	%	5	%	7	%
Americas International - Canada and Latin America	57		62		8	%	9	%	(8	)%	(4	)%
Total International	325		336		45	%	49	%	(3	)%	—	%
Total revenue	$	717	$	692	100	%	100	%	4	%	5	%

Revenue in the U.S. for the three months ended June 30, 2019 was $392 million compared to $356 million for the three months ended June 30, 2018. The increase in U.S. revenue was the result of a lower impact of applying fresh start accounting upon emergence from bankruptcy and the favorable impact of adopting ASC 606 ($30 million). The increase was partially offset by lower demand for the Company's unified communications and contact center products and lower maintenance and professional services revenue. Revenue in Europe, Middle East and Africa ("EMEA") for the three months ended June 30, 2019 was $183 million compared to $193 million for the three months ended June 30, 2018. The decrease in EMEA revenue was primarily attributable to lower unified communications products revenue and the unfavorable impact of foreign currency exchange rates, partially offset by the lower impact of fresh start accounting and the favorable impact of adopting ASC 606 ($6 million). Revenue in Asia Pacific ("APAC") for the three months ended June 30, 2019 was $85 million compared to $81 million for the three months ended June 30, 2018. The increase in APAC revenue was primarily attributable to the favorable impact of adopting ASC 606 ($6 million) and a lower impact of applying fresh start accounting upon emergence from bankruptcy, partially offset by lower unified communications revenue and the unfavorable impact of foreign currency exchange rates. Revenue in Americas International for the three months ended June 30, 2019 was $57 million compared to $62 million for the three months ended June 30, 2018. The decrease in Americas International revenue was primarily attributable to lower demand for the Company's unified communications and contact center products; lower professional services revenue; and the unfavorable impact of foreign currency exchange rates, partially offset by a lower impact of applying fresh start accounting upon emergence from bankruptcy and the favorable impact of adopting ASC 606 ($3 million).

We sell our products and solutions both directly to end users and through an indirect sales channel. The following table provides a comparison of direct and indirect Products & Solutions revenue for the periods indicated:

					Percentage of Total Products & Solutions Revenue						Yr. to Yr. Percentage Change, net of Foreign Currency Impact
(In millions)	Three months ended June 30, 2019		Three months ended June 30, 2018		Three months ended June 30, 2019		Three months ended June 30, 2018		Yr. to Yr. Percentage Change
Direct	$	91	$	88	31	%	27	%	3	%	5	%
Indirect	207		234		69	%	73	%	(12	)%	(11	)%
Total Products & Solutions revenue	$	298	$	322	100	%	100	%	(7	)%	(6	)%

42

Gross Profit

The following table sets forth gross profit and gross margin by operating segment for the periods indicated:

							Gross Margin				Change
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Three months ended June 30, 2019		Three months ended June 30, 2018		Amount			Percent
Products & Solutions	$	189		$	210		63.4	%	65.2	%	$	(21	)	(10	)%
Services	249			257			59.0	%	59.4	%	(8		)	(3	)%
Unallocated amounts	(48		)	(115		)	(1	)	(1	)	67			(1)
Total	$	390		$	352		54.4	%	50.9	%	$	38		11	%

⁽¹⁾  Not meaningful

Gross profit for the three months ended June 30, 2019 was $390 million compared to $352 million for the three months ended June 30, 2018. The increase was primarily driven by the increase in revenue described above, partially offset by the unfavorable impact of costs recognized on an accelerated basis under ASC 606 ($11 million).

Products & Solutions gross profit for the three months ended June 30, 2019 was $189 million compared to $210 million for the three months ended June 30, 2018. The decrease was mainly attributable to the decline in revenue described above. Products & Solutions gross margin decreased from 65.2% to 63.4% in the three months ended June 30, 2019 mainly driven by unfavorable product mix.

Services gross profit for the three months ended June 30, 2019 was $249 million compared to $257 million for the three months ended June 30, 2018. Services gross margin decreased from 59.4% to 59.0% in the three months ended June 30, 2019.

Unallocated amounts for the three months ended June 30, 2019 and 2018 include the fair value adjustments recognized upon emergence from bankruptcy and excluded from segment gross profit; the effect of the amortization of technology intangibles; and costs that are not core to the measurement of segment performance, but rather are controlled at the corporate level.

Operating Expenses

The following table sets forth operating expenses and the percentage of operating expenses to total revenue for the periods indicated:

					Percentage of Total Revenue				Change
(In millions)	Three months ended June 30, 2019		Three months ended June 30, 2018		Three months ended June 30, 2019		Three months ended June 30, 2018		Amount			Percent
Selling, general and administrative	$	253	$	281	35.3	%	40.6	%	$	(28	)	(10	)%
Research and development	49		51		6.8	%	7.4	%	(2		)	(4	)%
Amortization of intangible assets	41		39		5.7	%	5.6	%	2			5	%
Impairment charges	659		—		91.9	%	—	%	659			n/a
Restructuring charges, net	1		30		0.2	%	4.3	%	(29		)	(97	)%
Total operating expenses	$	1,003	$	401	139.9	%	57.9	%	$	602		150	%

Selling, general and administrative expenses for the three months ended June 30, 2019 were $253 million compared to $281 million for the three months ended June 30, 2018. The decrease was primarily attributable to lower sales commissions and accrued incentive compensation due to the Company's revenue performance; the favorable impact of foreign currency exchange rates; a lower impact of applying fresh start accounting; and lower acquisition-related costs due to the Spoken acquisition in the prior year. The impact of applying fresh start accounting resulted in additional depreciation expense in the prior year period as property, plant and equipment was recorded at fair value, resulting in higher asset values; and lower sales commissions expense in the prior year period due to the recognition of deferred revenue at fair value, which resulted in lower revenue and sales commission expense in subsequent periods.

Research and development expenses for the three months ended June 30, 2019 were $49 million compared to $51 million for the three months ended June 30, 2018. The decrease was primarily attributable to the favorable impact of foreign currency exchange rates.

Amortization of intangible assets for the three months ended June 30, 2019 was $41 million compared to $39 million for the three months ended June 30, 2018.

43

Impairment charges for the three months ended June 30, 2019 were $659 million. During the three months ended June 30, 2019, the Company performed an interim impairment test of its goodwill and indefinite-lived intangible assets due to a sustained decrease in the Company’s stock price and lower than planned financial results which led to revisions to the Company's long-term forecast during the third quarter of fiscal 2019. The results of the Company’s interim goodwill impairment test as of June 30, 2019 indicated that the estimated fair values of the Company’s Unified Communications (“UC”), Global Support Services (“GSS”), Avaya Professional Services (“APS”) and Enterprise Cloud and Managed Solutions (“ECMS”) reporting units were greater than their carrying amounts, however, the carrying amount of the Company’s Contact Center (“CC”) reporting unit within the Products & Solutions segment exceeded its estimated fair value primarily due to a reduction in the Company's long-term forecast. As a result, the Company recorded a goodwill impairment charge of $657 million, representing the amount by which the carrying amount of the CC reporting unit exceeded its fair value. As of June 30, 2019, the remaining carrying amount of goodwill for the CC reporting unit was $197 million. As of June 30, 2019, the fair value of the UC, APS and ECMS reporting units exceeded their carrying amounts by more than 10%, however, the GSS reporting unit had an excess fair value over its carrying value of 7%. The goodwill assigned to GSS is $1,446 million. An increase in the GSS discount rate of 65 basis points or a decrease in the GSS long-term growth rate of 95 basis points used in the interim goodwill impairment test as of June 30, 2019 would result in an estimated fair value below its carrying value.The results of the indefinite-lived intangible asset impairment test indicated that no impairment existed. During the three months ended June 30, 2019, the Company also elected to abandon an in-process research and development project acquired with Spoken since it no longer aligned with the Company’s technology roadmap. As a result, the Company recorded an impairment charge of $2 million to write down the full carrying amount of the acquired in-process research and development project. No impairment charges were recorded during the three months ended June 30, 2018. To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional impairment charges in the future.

Restructuring charges, net, for the three months ended June 30, 2019 were $1 million compared to $30 million for the three months ended June 30, 2018. Restructuring charges during the three months ended June 30, 2018 included employee separation costs of $29 million primarily associated with employee severance actions in the EMEA and the U.S.

Operating Loss

Operating loss for the three months ended June 30, 2019 was $613 million compared to $49 million for the three months ended June 30, 2018. Our operating results for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 reflect, among other things:

• higher revenue and gross profit for the three months ended June 30, 2019, as described above;

• impairment charges of $659 million for the three months ended June 30, 2019;

• lower restructuring charges for the three months ended June 30, 2019;

• lower accrued incentive compensation and sales commissions in the current year; and

• the favorable impact of adopting ASC 606 on October 1, 2018.

Interest Expense

Interest expense for the three months ended June 30, 2019 was $59 million compared to $56 million for the three months ended June 30, 2018. The increase was due to interest expense associated with the Convertible Notes issued in June 2018.

Other Income, Net

Other income, net for the three months ended June 30, 2019 was $12 million compared to $37 million for the three months ended June 30, 2018. Other income, net for the three months ended June 30, 2019 consisted of a change in fair value of the warrants issued in accordance with the Plan of Reorganization to certain holders of the Predecessor second lien obligations ("Emergence Date Warrants") of $7 million; interest income of $4 million; other pension and post-retirement benefit credits of $1 million; and other, net of $1 million, partially offset by net foreign currency losses of $1 million. Other income, net for the three months ended June 30, 2018 included net foreign currency gains of $25 million, principally due to the strengthening of the U.S. dollar compared to certain foreign exchange rates on U.S. dollar denominated receivables maintained in non-U.S. locations, mainly Argentina, India and Mexico; a change in fair value of the Emergence Date Warrants of $6 million; other pension and post-retirement benefit credits of $4 million; income from a transition services agreement entered into in connection with the sale of the Networking business to Extreme (the "TSA") of $1 million; and interest income of $1 million.

Benefit from (Provision for) Income Taxes

The benefit from income taxes was $27 million for the three months ended June 30, 2019 compared with a provision for income taxes of $20 million for the three months ended June 30, 2018.

44

The Company's effective income tax rate for the three months ended June 30, 2019 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Tax Cuts and Jobs Act ("the Act"), (7) the goodwill impairment charges recorded in the current year period, (8) current period elections taken in submitted tax filings, and (9) foreign tax credits.

The Company's effective income tax rate for the three months ended June 30, 2018 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Act, and (7) foreign tax credits.

Net Loss

Net loss was $633 million for the three months ended June 30, 2019 compared to $88 million for the three months ended June 30, 2018, as a result of the items discussed above.

Nine Months Ended June 30, 2019 Compared with the Nine Months Ended June 30, 2018 Combined Results

Revenue

Revenue for the nine months ended June 30, 2019 was $2,164 million compared to $2,116 million for the nine months ended June 30, 2018. The increase was primarily driven by a lower impact of applying fresh start accounting upon emergence from bankruptcy, which resulted in the recognition of deferred revenue at fair value and lower revenue in subsequent periods and the favorable impact of adopting ASC 606 ($131 million). The increase was partially offset by lower demand for the Company’s unified communications and contact center products; lower professional services revenue mainly driven by the operational changes implemented in the current year to drive performance under ASC 606; a decline in maintenance services revenue due to declines in Products & Solutions revenue in prior periods; and the unfavorable impact of foreign currency exchange rates.

The following table displays revenue and the percentage of revenue to total sales by operating segment for the periods indicated:

												Percentage of Total Revenue
	Successor						Predecessor		Non-GAAP Combined			Successor		Non-GAAP Combined				Yr. to Yr. Percentage Change, net of Foreign Currency Impact
(In millions)	Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017		Nine months ended June 30, 2018			Nine months ended June 30, 2019		Nine months ended June 30, 2018		Yr. to Yr. Percentage Change
Products & Solutions	$	913		$	716		$	253	$	969		42	%	46	%	(6	)%	(5	)%
Services	1,269			967			351		1,318			59	%	62	%	(4	)%	(2	)%
Unallocated amounts	(18		)	(171		)	—		(171		)	(1	)%	(8	)%	(1)		(1)
Total revenue	$	2,164		$	1,512		$	604	$	2,116		100	%	100	%	2	%	4	%

⁽¹⁾  Not meaningful

Products & Solutions revenue for the nine months ended June 30, 2019 was $913 million compared to $969 million for the nine months ended June 30, 2018. The decrease was primarily attributable to lower unified communications and contact center revenue and the unfavorable impact of foreign currency exchange rates, partially offset by the favorable impact of adopting ASC 606 ($71 million).

Services revenue for the nine months ended June 30, 2019 was $1,269 million compared to $1,318 million for the nine months ended June 30, 2018. The decrease was primarily due to lower professional services revenue mainly driven by the operational changes implemented in the current year to drive performance under ASC 606; a decline in maintenance services revenue due to declines in Products & Solutions revenue in prior periods; and the unfavorable impact of foreign currency exchange rates, partially offset by the favorable impact of adopting ASC 606 ($60 million).

Unallocated amounts for the nine months ended June 30, 2019 and 2018 represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

45

The following table displays revenue and the percentage of revenue to total sales by location for the periods indicated:

									Percentage of Total Revenue
	Successor				Predecessor		Non-GAAP Combined		Successor		Non-GAAP Combined				Yr. to Yr. Percentage Change, net of Foreign Currency Impact
(In millions)	Nine months ended June 30, 2019		Period from December 16, 2017 through June 30, 2018		Period from October 1, 2017 through December 15, 2017		Nine months ended June 30, 2018		Nine months ended June 30, 2019		Nine months ended June 30, 2018		Yr. to Yr. Percentage Change
U.S.	$	1,161	$	791	$	331	$	1,122	54	%	53	%	3	%	3	%
International:
Europe, Middle East and Africa	570		407		166		573		26	%	27	%	(1	)%	2	%
Asia Pacific	242		178		57		235		11	%	11	%	3	%	6	%
Americas International - Canada and Latin America	191		136		50		186		9	%	9	%	3	%	6	%
Total International	1,003		721		273		994		46	%	47	%	1	%	4	%
Total revenue	$	2,164	$	1,512	$	604	$	2,116	100	%	100	%	2	%	4	%

Revenue in the U.S. for the nine months ended June 30, 2019 was $1,161 million compared to $1,122 million for the nine months ended June 30, 2018. The increase in U.S. revenue was the result of a lower impact of applying fresh start accounting upon emergence from bankruptcy and the favorable impact of adopting ASC 606 ($72 million). The increase was partially offset by lower demand for the Company's unified communications and contact center products and a decline in professional and maintenance services revenue. Revenue in EMEA for the nine months ended June 30, 2019 was $570 million compared to $573 million for the nine months ended June 30, 2018. The decrease in EMEA revenue was primarily attributable to lower demand for our unified communications products; lower professional services revenue; and the unfavorable impact of foreign currency exchange rates, partially offset by a lower impact of fresh start accounting and the favorable impact of adopting ASC 606 ($20 million). Revenue in APAC for the nine months ended June 30, 2019 was $242 million compared to $235 million for the nine months ended June 30, 2018. The increase in APAC revenue was primarily attributable to the favorable impact of adopting ASC 606 ($16 million); a lower impact of fresh start accounting; and higher maintenance services revenue, partially offset by lower demand for our unified communications and contact center products; lower professional services revenue; and the unfavorable impact of foreign currency exchange rates. Revenue in Americas International for the nine months ended June 30, 2019 was $191 million compared to $186 million for the nine months ended June 30, 2018. The increase in Americas International revenue was primarily attributable to the favorable impact of adopting ASC 606 ($23 million) and a lower impact of fresh start accounting, partially offset by lower professional services revenue; lower demand for our contact center and unified communications products; and the unfavorable impact of foreign currency exchange rates.

We sell our products and solutions both directly to end users and through an indirect sales channel. The following table provides a comparison of direct and indirect Products & Solutions revenue for the periods indicated:

									Percentage of Total Products & Solutions Revenue
	Successor				Predecessor		Non-GAAP Combined		Successor		Non-GAAP Combined				Yr. to Yr. Percentage Change, net of Foreign Currency Impact
(In millions)	Nine months ended June 30, 2019		Period from December 16, 2017 through June 30, 2018		Period from October 1, 2017 through December 15, 2017		Nine months ended June 30, 2018		Nine months ended June 30, 2019		Nine months ended June 30, 2018		Yr. to Yr. Percentage Change
Direct	$	277	$	204	$	80	$	284	30	%	29	%	(2	)%	(2	)%
Indirect	636		512		173		685		70	%	71	%	(7	)%	(6	)%
Total Products & Solutions revenue	$	913	$	716	$	253	$	969	100	%	100	%	(6	)%	(5	)%

46

Gross Profit

The following table sets forth gross profit and gross margin by operating segment for the periods indicated:

													Gross Margin
	Successor						Predecessor			Non-GAAP Combined			Successor		Non-GAAP Combined		Change
(In millions)	Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017			Nine months ended June 30, 2018			Nine months ended June 30, 2019		Nine months ended June 30, 2018		Amount			Percent
Products & Solutions	$	587		$	473		$	169		$	642		64.3	%	66.3	%	$	(55	)	(9	)%
Services	759			582			196			778			59.8	%	59.0	%	(19		)	(2	)%
Unallocated amounts	(163		)	(302		)	(3		)	(305		)	(1	)	(1)		142			(1)
Total	$	1,183		$	753		$	362		$	1,115		54.7	%	52.7	%	$	68		6	%

⁽¹⁾  Not meaningful

Gross profit for the nine months ended June 30, 2019 was $1,183 million compared to $1,115 million for the nine months ended June 30, 2018. The increase was primarily driven by the increase in revenue described above, partially offset by amortization of technology intangibles with higher asset values due to the application of fresh start accounting upon emergence from bankruptcy and the unfavorable impact of costs recognized on an accelerated basis under ASC 606 ($33 million).

Products & Solutions gross profit for the nine months ended June 30, 2019 was $587 million compared to $642 million for the nine months ended June 30, 2018. The decrease was mainly attributable to the decline in revenue described above. Products & Solutions gross margin decreased from 66.3% to 64.3% in the nine months ended June 30, 2019 mainly driven by unfavorable product mix.

Services gross profit for the nine months ended June 30, 2019 was $759 million compared to $778 million for the nine months ended June 30, 2018. The decrease was mainly due to the decline in revenue described above. Services gross margin increased from 59.0% to 59.8% in the nine months ended June 30, 2019 mainly driven by cost savings related to the Company's restructuring programs.

Unallocated amounts for the nine months ended June 30, 2019 and 2018 include the fair value adjustments recognized upon emergence from bankruptcy and excluded from segment gross profit; the effect of the amortization of technology intangibles; and costs that are not core to the measurement of segment performance, but rather are controlled at the corporate level.

Operating Expenses

The following table sets forth operating expenses and the percentage of operating expenses to total revenue for the periods indicated:

									Percentage of Total Revenue
	Successor				Predecessor		Non-GAAP Combined		Successor		Non-GAAP Combined		Change
(In millions)	Nine months ended June 30, 2019		Period from December 16, 2017 through June 30, 2018		Period from October 1, 2017 through December 15, 2017		Nine months ended June 30, 2018		Nine months ended June 30, 2019		Nine months ended June 30, 2018		Amount			Percent
Selling, general and administrative	$	761	$	613	$	264	$	877	35.1	%	41.4	%	$	(116	)	(13	)%
Research and development	154		110		38		148		7.1	%	7.0	%	6			4	%
Amortization of intangible assets	122		86		10		96		5.6	%	4.5	%	26			27	%
Impairment charges	659		—		—		—		30.5	%	—	%	659			n/a
Restructuring charges, net	12		80		14		94		0.6	%	4.5	%	(82		)	(87	)%
Total operating expenses	$	1,708	$	889	$	326	$	1,215	78.9	%	57.4	%	$	493		41	%

Selling, general and administrative expenses for the nine months ended June 30, 2019 were $761 million compared to $877 million for the nine months ended June 30, 2018. The decrease was primarily attributable to costs incurred in the prior year in connection with certain legal matters and advisory fees to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure; lower accrued incentive compensation and sales commissions due to the Company's

47

revenue performance; the favorable impact of foreign currency exchange rates; and the favorable impact of capitalizing sales commissions in the current year due to the adoption of ASC 606 ($3 million). The decrease was partially offset by an increase in non-cash share-based compensation due to a longer amortization period for Successor Company stock awards included in the current year. Share-based compensation expense related to cancelled Predecessor Company stock awards was recorded within Reorganization items, net during the period from October 1, 2017 through December 15, 2017 (Predecessor).

Research and development expenses for the nine months ended June 30, 2019 were $154 million compared to $148 million for the nine months ended June 30, 2018. The increase was primarily attributable to investments in new product development and incremental expenses associated with the Spoken acquisition, partially offset by the favorable impact of foreign currency exchange rates.

Amortization of intangible assets for the nine months ended June 30, 2019 was $122 million compared to $96 million for the nine months ended June 30, 2018. The carrying value of intangible assets was adjusted upon the application of fresh start accounting, which resulted in higher asset values and an increase in amortization during the current year period.

Impairment charges for the nine months ended June 30, 2019 were $659 million. During the nine months ended June 30, 2019, the Company performed an interim impairment test of its goodwill and indefinite-lived intangible assets due to a sustained decrease in the Company’s stock price and lower than planned financial results which led to revisions to the Company's long-term forecast during the third quarter of fiscal 2019. The results of the Company’s interim goodwill impairment test as of June 30, 2019 indicated that the estimated fair values of the Company’s Unified Communications (“UC”), Global Support Services (“GSS”), Avaya Professional Services (“APS”) and Enterprise Cloud and Managed Solutions (“ECMS”) reporting units were greater than their carrying amounts, however, the carrying amount of the Company’s Contact Center (“CC”) reporting unit within the Products & Solutions segment exceeded its estimated fair value primarily due to a reduction in the Company's long-term forecast. As a result, the Company recorded a goodwill impairment charge of $657 million, representing the amount by which the carrying amount of the CC reporting unit exceeded its fair value. As of June 30, 2019, the remaining carrying amount of goodwill for the CC reporting unit was $197 million. As of June 30, 2019, the fair value of the UC, APS and ECMS reporting units exceeded their carrying amounts by more than 10%, however, the GSS reporting unit had an excess fair value over its carrying value of 7%. The goodwill assigned to GSS is $1,446 million. An increase in the GSS discount rate of 65 basis points or a decrease in the GSS long-term growth rate of 95 basis points used in the interim goodwill impairment test as of June 30, 2019 would result in an estimated fair value below its carrying value.The results of the indefinite-lived intangible asset impairment test indicated that no impairment existed. During the nine months ended June 30, 2019, the Company also elected to abandon an in-process research and development project acquired with Spoken since it no longer aligned with the Company’s technology roadmap. As a result, the Company recorded an impairment charge of $2 million to write down the full carrying amount of the acquired in-process research and development project. No impairment charges were recorded during the nine months ended June 30, 2018. To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional impairment charges in the future.

Restructuring charges, net, for the nine months ended June 30, 2019 were $12 million compared to $94 million for the nine months ended June 30, 2018. Restructuring charges during the nine months ended June 30, 2019 consisted of employee separation costs of $10 million primarily associated with employee severance actions in the U.S., EMEA and Canada and lease obligations of $2 million primarily in the U.S. Restructuring charges during the nine months ended June 30, 2018 included employee separation costs of $82 million primarily associated with employee severance actions in the EMEA and the U.S. and lease obligations of $12 million, primarily in the U.S. and EMEA.

Operating Loss

Operating loss for the nine months ended June 30, 2019 was $525 million compared to $100 million for the nine months ended June 30, 2018. Our operating results for the nine months ended June 30, 2019 as compared to the nine months ended June 30, 2018 reflect, among other things:

• higher revenue and gross profit for the nine months ended June 30, 2019, as described above;

• impairment charges of $659 million for the nine months ended June 30, 2019;

• costs incurred in connection with certain legal matters of $37 million for the nine months ended June 30, 2018;

• lower restructuring charges for the nine months ended June 30, 2019;

• lower advisory fees incurred to assist in the assessment of strategic and financial alternatives to improve the Company’s capital structure during the nine months ended June 30, 2019 of $15 million;

• higher amortization of intangible assets due to the application of fresh start accounting upon emergence from bankruptcy;

• the favorable impact of adopting ASC 606 on October 1, 2018; and

48

• lower accrued incentive compensation and sales commissions in the current year.

Interest Expense

Interest expense for the nine months ended June 30, 2019 was $177 million compared to $126 million for the nine months ended June 30, 2018. For the period from October 1, 2017 through December 15, 2017, contractual interest expense of $94 million was not recorded, as it was not an allowed claim under the Company's bankruptcy filing. The decline in interest expense, when including the contractual interest expense of $94 million not recorded in the prior year period, was driven by lower average debt balances outstanding in the current year period as a result of the Company’s Plan of Reorganization upon emergence from bankruptcy.

Other Income, Net

Other income, net for the nine months ended June 30, 2019 was $35 million as compared to $30 million for the nine months ended June 30, 2018. Other income, net for the nine months ended June 30, 2019 consisted of a change in fair value of the Emergence Date Warrants of $28 million; interest income of $11 million; and other pension and post-retirement benefit costs of $5 million, partially offset by net foreign currency losses of $8 million and other, net of $1 million. Other income, net for the nine months ended June 30, 2018 included net foreign currency gains of $24 million, principally due to the strengthening of the U.S. dollar compared to certain foreign exchange rates on U.S. dollar denominated receivables maintained in non-U.S. locations, mainly Argentina, India and Mexico; income from the TSA of $8 million; interest income of $4 million; other, net of $2 million; and other pension and post-retirement benefit credits, net of $1 million, partially offset by a change in fair value of the Emergence Date Warrants of $9 million.

Reorganization Items, Net

Reorganization items, net for the nine months ended June 30, 2018 were $3,416 million and primarily consists of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities. Reorganization items, net also represent amounts incurred subsequent to the Bankruptcy Filing as a direct result of the Bankruptcy Filing and are comprised of professional service fees and contract rejection fees.

Benefit from (Provision for) Income Taxes

The benefit from income taxes was $30 million for the nine months ended June 30, 2019 compared with a provision of $224 million for the nine months ended June 30, 2018.

The Company's effective income tax rate for the nine months ended June 30, 2019 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Act, (7) the goodwill impairment charges recorded in the current year period, (8) current period elections taken in submitted tax filings, and (9) foreign tax credits.

The Company's effective income tax rate for the period from December 16, 2017 through June 30, 2018 (Successor) differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) an increase in estimated current year tax loss, which is eliminated as part of the attribute reduction related to the cancellation of indebtedness income ("CODI"), and (7) the impact of the Act, which only affects the period from December 16, 2017 through June 30, 2018 (Successor).

The Company's effective income tax rate for the period from October 1, 2017 through December 15, 2017 (Predecessor) differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local taxes, and (6) the impact of reorganization and fresh start adjustments.

Net (Loss) Income

Net loss was $637 million for the nine months ended June 30, 2019 compared to net income of $2,996 million for the nine months ended June 30, 2018, as a result of the items discussed above.

Liquidity and Capital Resources

We expect our existing cash balance, cash generated by operations and borrowings available under our ABL Credit Agreement to be our primary sources of short-term liquidity. Our ability to meet our cash requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other

49

factors that are beyond our control. Based on our current level of operations, we believe these sources will be adequate to meet our liquidity needs for at least the next twelve months.

Cash Flow Activity

The following table provides a summary of the statements of cash flows for the periods indicated:

	Successor						Predecessor			Non-GAAP Combined
(In millions)	Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017			Nine months ended June 30, 2018
Net cash provided by (used for):
Operating activities	$	175		$	177		$	(414	)	$	(237	)
Investing activities	(95		)	(192		)	(13		)	(205		)
Financing activities	(51		)	284			(102		)	182
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	1			(5		)	(2		)	(7		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	30			264			(531		)	(267		)
Cash, cash equivalents, and restricted cash at beginning of period	704			435			966			966
Cash, cash equivalents, and restricted cash at end of period	$	734		$	699		$	435		$	699

Operating Activities

Cash provided by operating activities for the nine months ended June 30, 2019 was $175 million, compared to cash used for operating activities of $237 million for the nine months ended June 30, 2018. The change between the nine months ended June 30, 2019 and 2018 was primarily due to payments made during the nine months ended June 30, 2018 related to the Company's reorganization and emergence from bankruptcy, which included payments to the Pension Benefit Guaranty Corporation ($340 million), general unsecured creditor claims ($58 million) and the Avaya Pension Plan trust ($49 million); the timing of vendor and customer payments; lower restructuring payments; and lower advisory fees to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure. These lower payments were partially offset by higher interest due to the cessation of such payments in January 2017 during the bankruptcy process; lower cash earnings; higher income tax payments; and increases in inventory.

Investing Activities

Cash used for investing activities for the nine months ended June 30, 2019 and 2018 was $95 million and $205 million, respectively. The decrease was primarily due to cash paid for the Spoken acquisition of $157 million in the prior year period,partially offset by higher capital expenditures for IT-related projects and the Company's investment in a unified communications as a service (“UCaaS”) provider catering to public sector security requirements.

Financing Activities

Cash used for financing activities for the nine months ended June 30, 2019 was $51 million, compared to cash provided by financing activities of $182 million for the nine months ended June 30, 2018.

Cash used for financing activities for the nine months ended June 30, 2019 included:

• scheduled debt repayments under the Term Loan Credit Agreement of $22 million;

• repayments in connection with financing the use of equipment for the performance of services under our agreement with HP Enterprise Services, LLC ("HP") of $10 million;

• payment of contingent consideration related to the Spoken acquisition of $9 million; and

• other financing activities, net of $10 million.

Cash provided by financing activities for the nine months ended June 30, 2018 included:

• proceeds of $2,896 million from the Term Loan Credit Agreement entered into on the Emergence Date;

• proceeds of $350 million from the issuance of 2.25% Convertible Notes; and

• proceeds from the issuance of call spread warrants (the "Call Spread Warrants") of $58 million;

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• partially offset by repayment of the Company's Term Loan Credit Agreement of $2,918 million as part of its refinancing in the prior year, net of proceeds received under the refinancing of $2,911 million;

• repayments to the Predecessor Company first lien debt holders of $2,061 million;

• repayment of the Predecessor Company debtor-in-possession credit agreement of $725 million;

• adequate protection payments related to the bankruptcy of $111 million;

• payment of debt issuance costs of $107 million;

• the purchase of a bond hedge of $84 million;

• scheduled debt repayments under the Term Loan Credit Agreement of $15 million;

• repayments in connection with financing the use of equipment for the performance of services under our agreement with HP of $11 million; and

• other financing activities, net of $1 million.

As of June 30, 2019, the Company was not in default under any of its debt agreements.

Future Cash Requirements

Our primary future cash requirements will be to fund debt service, restructuring payments, capital expenditures and benefit obligations. In addition, we may use cash in the future to make strategic acquisitions.

Specifically, we expect our primary cash requirements for the remainder of fiscal 2019 to be as follows:

• Debt service—We expect to make payments of approximately $53 million during the remainder of fiscal 2019 in principal and interest associated with the Term Loan Credit Agreement, and interest and fees associated with our ABL Credit Agreement and 2.25% Convertible Notes due 2023. In the ordinary course of business, we may from time to time borrow and repay amounts under our ABL Credit Agreement.

• Restructuring payments—We expect to make payments of approximately $15 million to $20 million during the remainder of fiscal 2019 for employee separation costs and lease termination obligations associated with restructuring actions we have taken through June 30, 2019. The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally.

• Capital expenditures—We expect to spend approximately $35 million for capital expenditures and capitalized software development costs during the remainder of fiscal 2019.

• Benefit obligations—We estimate we will make payments under our pension and post-retirement benefit obligations totaling $14 million during the remainder of fiscal 2019. These payments include $5 million to satisfy the minimum statutory funding requirements of our U.S. qualified pension plans; $6 million for our non-U.S. benefit plans, which are predominantly not pre-funded; and $3 million for represented retiree post-retirement benefits. See discussion in Note 12, "Benefit Obligations," to our unaudited interim Condensed Consolidated Financial Statements for further details.

In addition to the matters identified above, in the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations and proceedings, including but not limited to those identified in Note 19, "Commitments and Contingencies," to our unaudited interim Condensed Consolidated Financial Statements, relating to intellectual property, commercial, employment, environmental and regulatory matters, which may require us to make cash payments. These and other legal matters could have a material adverse effect on the manner in which the Company does business and the Company's financial position, results of operations, cash flows and liquidity. During the nine months ended June 30, 2019 (Successor) and the period from December 16, 2017 through June 30, 2018 (Successor), there were no costs incurred in connection with the resolution of certain legal matters other than those incurred in the ordinary course of business. During the period from October 1, 2017 through December 15, 2017 (Predecessor), costs incurred in connection with the resolution of certain legal matters were $37 million.

We and our subsidiaries and affiliates may from time to time seek to retire or purchase our outstanding equity (common stock and warrants) and/or debt (including publicly issued debt) through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. 

Future Sources of Liquidity

We expect our cash balance, cash generated by operations and borrowings available under our ABL Credit Agreement to be our primary sources of short-term liquidity.

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As of June 30, 2019 and September 30, 2018, our cash and cash equivalent balances held outside the U.S. were $143 million and $169 million, respectively. As of June 30, 2019, cash and cash equivalents held outside the U.S. in excess of in-country needs and, which could not be distributed to the U.S. without restriction, were not material.

Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At June 30, 2019, the Company had issued and outstanding letters of credit and guarantees of $45 million under the ABL Credit Agreement and had no other borrowings outstanding under the ABL. The aggregate additional principal amount that may be borrowed under the ABL Credit Agreement, based on the borrowing base less $45 million of outstanding letters of credit and guarantees, was $139 million at June 30, 2019.

We believe that our existing cash and cash equivalents of $729 million as of June 30, 2019, future cash provided by operating activities and borrowings available under the ABL Credit Agreement will be sufficient to meet our future cash requirements for at least the next twelve months. Our ability to meet these requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Off-Balance Sheet Arrangements

See discussion in Note 19, "Commitments and Contingencies," to our unaudited interim Condensed Consolidated Financial Statements for further details.

Debt Ratings

As of June 30, 2019, the Company's debt ratings were as follows:

• Moody’s Investors Service issued a corporate family rating of "B2" with a stable outlook and a rating of the 7-year $2,925 million Term Loan Credit Agreement of "B2";

• Standard and Poor's issued a definitive corporate credit rating of "B" with a stable outlook and a rating of the Term Loan Credit Agreement of "B"; and

• Fitch Ratings Inc. issued a Long-Term Issuer Default Rating of "B" with a stable outlook and a rating of the Term Loan Credit Agreement of "BB-".

Our ability to obtain additional external financing and the related cost of borrowing may be affected by our ratings, which are periodically reviewed by the major credit rating agencies. The ratings are subject to change or withdrawal at any time by the respective credit rating agencies.

Critical Accounting Policies and Estimates

Management has reassessed the critical accounting policies as disclosed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 21, 2018 and determined that there were no significant changes to our critical accounting policies for the nine months ended June 30, 2019, except for recently adopted accounting policy changes as discussed in Note 2 to our unaudited interim Condensed Consolidated Financial Statements.

New Accounting Pronouncements

See discussion in Note 2, "Recent Accounting Pronouncements," to our unaudited interim Condensed Consolidated Financial Statements for further details.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income (loss) before income taxes, interest expense, interest income and depreciation and amortization and excludes the results of discontinued operations. EBITDA provides us with a measure of operating performance that excludes certain non-operating and/or non-cash expenses, which can differ significantly from company to company depending on capital structure, the tax jurisdictions in which companies operate and capital investments.

Adjusted EBITDA is EBITDA as further adjusted by the items noted in the reconciliation table below. We believe Adjusted EBITDA provides a measure of our financial performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization, and therefore presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years. In addition, Adjusted EBITDA serves as a basis for determining certain management and employee compensation. We also present EBITDA and Adjusted EBITDA because we believe analysts and investors utilize these measures in analyzing our results. Under the Company's debt agreements, the ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied in part to ratios based on a measure of Adjusted EBITDA.

EBITDA and Adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be

52

sufficient to fund cash needs. While EBITDA measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Further, Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations but could be substantial. In particular, our formulation of Adjusted EBITDA adjusts for certain amounts that are included in calculating net income (loss) as set forth in the following table including, but not limited to, restructuring charges, impairment charges, certain fees payable to our Predecessor private equity sponsors and other advisors, resolution of certain legal matters and a portion of our pension costs and post-retirement benefits costs, which represents the amortization of pension service costs and actuarial gain (loss) associated with these benefits. However, these are expenses that may recur, may vary and/or may be difficult to predict.

The unaudited reconciliation of net (loss) income, which is a GAAP measure, to EBITDA and Adjusted EBITDA, which are non-GAAP measures, is presented below for the periods indicated:

		Successor												Predecessor
(In millions)		Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
Net (loss) income		$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977
Interest expense	(a)	59			56			177			112			14
Interest income		(4		)	(1		)	(11		)	(2		)	(2		)
(Benefit from) provision for income taxes		(27		)	20			(30		)	(235		)	459
Depreciation and amortization		110			119			335			264			31
EBITDA		(495		)	106			(166		)	158			3,479
Impact of fresh start accounting adjustments	(b)	(2		)	54			7			167			—
Restructuring charges, net		1			30			12			80			14
Advisory fees	(c)	1			3			3			15			3
Acquisition-related costs		1			4			8			11			—
Reorganization items, net		—			—			—			—			(3,416		)
Non-cash share-based compensation		8			7			19			13			—
Impairment charges		659			—			659			—			—
Loss on sale/disposal of long-lived assets, net		—			2			—			4			1
Resolution of certain legal matters	(d)	—			—			—			—			37
Change in fair value of Emergence Date Warrants		(7		)	(6		)	(28		)	9			—
Loss (gain) on foreign currency transactions		1			(25		)	8			(24		)	—
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs	(e)	—			—			—			—			17
Adjusted EBITDA		$	167		$	175		$	522		$	433		$	135

^(a)  Effective January 19, 2017, the Company ceased recording interest expense on outstanding pre-petition debt classified as liabilities subject to compromise. Contractual interest expense represents amounts due under the contractual terms of outstanding debt, including debt subject to compromise. For the period from October 1, 2017 through December 15, 2017, contractual interest expense related to debt subject to compromise of $94 million had not been recorded as interest expense, as it was not an allowed claim under the Bankruptcy Filing.

^(b)  The impact of fresh start accounting adjustments in connection with the Company's emergence from bankruptcy.

^(c)  Advisory fees represent costs incurred to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure.

^(d)  Costs in connection with the resolution of certain legal matters include reserves and settlements, as well as associated legal costs.

^(e)  Represents that portion of our pension and post-retirement benefit costs which represent the amortization of prior service costs and net actuarial gain (loss) associated with these benefits.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q, including statements containing words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "model," "can," "could," "may," "should," "will," "would" or similar words or the negative thereof, constitute "forward-looking statements." These forward-looking statements, which are based on our current plans, expectations, estimates and projections about future events, should not be unduly relied upon. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed or implied by such forward-looking statements. We caution you therefore against relying on any of these forward-looking statements.

The forward-looking statements included herein are based upon our assumptions, estimates and beliefs and involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and may be affected by a variety of risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.  Risks, uncertainties and other factors that may cause these forward-looking statements to be inaccurate include, among others: the announcement that our board of directors is exploring strategic alternatives and the potential impact of such announcement on our current or potential customers, partners or personnel; the cost of such exploration and the disruption it may have on our operations, including diverting the attention of our management and employees; and other risks and factors discussed in Part I, Item 1A "Risk Factors" and Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" to our Annual Report on Form 10-K filed with the SEC on December 21, 2018.

All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report will be achieved.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company has exposure to changing interest rates primarily under the Term Loan Credit Agreement and ABL Credit Agreement, each of which bears interest at variable rates based on LIBOR. The Company had $2,881 million of variable rate loans outstanding as of June 30, 2019.

On May 16, 2018, the Company entered into interest rate swap agreements with six counterparties, which fixed a portion of the variable interest due under its Term Loan Credit Agreement (the "Swap Agreements"). Under the terms of the Swap Agreements, which mature on December 15, 2022, the Company pays a fixed rate of 2.935% and receives a variable rate of interest based on one-month LIBOR. As of June 30, 2019, the total notional amount of the six Swap Agreements was $1,800 million.

It is management’s intention that the notional amount of the Swap Agreements be less than the variable rate loans outstanding during the life of the derivatives. For the three months ended June 30, 2019 and 2018, the Company recognized a loss on its hedge contracts of $2 million which is reflected in Interest expense in the Condensed Consolidated Statements of Operations. For the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018, the Company recognized a loss on its hedge contracts of $7 million and $2 million respectively, which is also reflected in Interest expense. At June 30, 2019, the fair value of the outstanding Swap Agreements was a deferred loss of $74 million. Based on the payment dates of the contracts, $19 million and $56 million, including accrued interest, was recorded in Other current liabilities and Other liabilities in the Condensed Consolidated Balance Sheets, respectively. On an annual basis, a hypothetical one percent change in interest rates for the $1,081 million of unhedged variable rate debt as of June 30, 2019 would affect interest expense by approximately $11 million.

Foreign Currency Risk

Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. ("foreign") operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well

54

as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are Euros, Canadian Dollars, British Pound Sterling, Chinese Renminbi, Indian Rupee, Australian Dollars and Brazilian Real.

Non-U.S. denominated revenue was $156 million and $475 million for the three and nine months endedJune 30, 2019, respectively. We estimate a 10% change in the value of the U.S. dollar relative to all foreign currencies would affect our revenue for the three and nine months endedJune 30, 2019 by $16 million and $48 million, respectively.

The Company, from time-to-time, utilizes foreign currency forward contracts primarily to hedge fluctuations associated with certain monetary assets and liabilities including receivables, payables and certain intercompany obligations. These foreign currency forward contracts are not designated for hedge accounting treatment. As a result, changes in the fair value of these contracts are recorded as a component of Other income (expense), net to offset the change in the value of the underlying assets and liabilities. As of June 30, 2019, the Company maintained open foreign exchange contracts with a total notional value of $355 million, hedging British Pounds Sterling, Indian Rupee, Czech Koruna, Australian Dollars and Mexican Peso. At June 30, 2019, the fair value of the open foreign exchange contracts was $2 million and recorded in Other current assets in the Condensed Consolidated Balance Sheets. For both the three and nine months endedJune 30, 2019, the Company's loss on foreign exchange contracts was $1 million and is recorded within Other income (expense) on the Condensed Consolidated Statement of Operations.

Item 4. Controls and Procedures

As of the end of the period covered by this report, management, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2019 solely because of the material weaknesses in the Company’s internal control over financial reporting described below.

Material Weaknesses in Internal Control Over Financial Reporting Existing as of June 30, 2019

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company identified a material weakness in connection with the preparation of the Company’s Condensed Consolidated Financial Statements for the quarter ended March 31, 2018 related to the reconciliation of cash and accounts receivable upon the adoption of fresh start accounting. Specifically, the Company’s internal controls with respect to the mid-month reconciliation of cash receipts and accounts receivable, which were required in connection with the adoption of fresh start accounting in accordance with GAAP, did not operate effectively to record certain cash receipts that were received on December 15, 2017, the date the Company emerged from bankruptcy. This internal control deficiency resulted in an adjustment in the financial statements of the Company’s cash and accounts receivable as of December 15, 2017, the Company’s cash flow statements, and the revision of the Company’s consolidated financial statements for the predecessor period ended December 15, 2017 and the successor period ended December 31, 2017.

In connection with the preparation of the Company’s consolidated financial statements for the successor period from December 16, 2017 through September 30, 2018, the Company identified an additional material weakness in the Company’s internal control over financial reporting related to the review of certain journal entries. Specifically, the Company did not maintain effective controls to ensure that there was appropriate segregation of duties related to recording journal entries. This material weakness did not result in a misstatement.

Each of the above material weaknesses could result in a misstatement of the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Notwithstanding the material weaknesses identified above, management believes the Condensed Consolidated Financial Statements as included in Part I of this Quarterly Report on Form 10-Q fairly represent, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles in the United States.

Remediation Efforts to Address Material Weaknesses Existing as of June 30, 2019

Management has implemented a remediation plan to address the control deficiencies that led to the material weaknesses referenced above. The remediation plan includes the following:

55

• Providing additional training for employees involved in the cash and accounts receivable reconciliation processes, as well as certain other reconciliation processes, and supplementing existing reviewers with higher skilled resources.

• Implementing a new system solution that automates and standardizes the account reconciliation process, including the use of standardized account reconciliation templates and workflows for the preparation, approval and review of account reconciliations with appropriate segregation of duties.

• Implementing changes to posting rights and responsibilities to eliminate segregation of duties conflicts.

• Providing additional training so that appropriate segregation of duties related to recording journal entries is achieved and performed on a timely basis as designed.

Changes In Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under Note 19, "Commitments and Contingencies," to the unaudited interim Condensed Consolidated Financial Statements is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes during the quarterly period ended June 30, 2019 to the risk factors previously disclosed in the Company's Form 10-K and Form 10-Q filed with the Securities and Exchange Commission on December 21, 2018 and May 13, 2019, respectively.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information with respect to purchases by the Company of shares of common stock during the three months ended June 30, 2019:

	Issuer Purchases of Equity Securities
	(a)	(b)		(c)	(d)
Period	Total Number of Shares (or Units) Purchased(1)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under Plans or Programs(2)
April 1 - 30, 2019	88,274	$	16.8300	—	$	15,000,000
May 1 - 31, 2019	7,593	$	14.9000	—	15,000,000
June 1 - 30, 2019	—	$	—	—	15,000,000
Total	95,867	$	16.6771	—	$	15,000,000

⁽¹⁾ Represents shares of common stock withheld for taxes on restricted stock units.

⁽²⁾ On November 14, 2018, the Company's Board of Directors approved a warrant repurchase program, authorizing the Company to repurchase the Company’s outstanding warrants to purchase shares of the Company’s common stock for an aggregate expenditure of up to $15 million. The repurchases may be made from time to time in the open market, through block trades or in privately negotiated transactions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number	Exhibit Description
31.1	Certification of James M. Chirico, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Kieran J. McGrath pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of James M. Chirico, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Kieran J. McGrath pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Labels Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AVAYA HOLDINGS CORP.
By:	/s/ KEVIN SPEED
Name:	Kevin Speed
Title:	Vice President, Controller and Chief Accounting Officer

August 13, 2019

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, James M. Chirico, Jr., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Avaya Holdings Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2019

/s/    JAMES M. CHIRICO, JR.

James M. Chirico, Jr.

Director, President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Kieran J. McGrath, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Avaya Holdings Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2019

/s/    KIERAN J. MCGRATH

Kieran J. McGrath

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Avaya Holdings Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James M. Chirico, Jr., Director, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    JAMES M. CHIRICO, JR.

James M. Chirico, Jr.

Director, President and Chief Executive Officer

(Principal Executive Officer)

Date: August 13, 2019

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Avaya Holdings Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kieran J. McGrath, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    KIERAN J. MCGRATH

Kieran J. McGrath

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: August 13, 2019

XML

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	AVAYA HOLDINGS CORP.
Entity Central Index Key	0001418100
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		111,016,298
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false

XML

Consolidated Statements of Operations shares in Millions, $ in Millions	2 Months Ended
	Dec. 15, 2017 USD ($) $ / shares shares
Predecessor
REVENUE
Revenue	$ 604
COSTS
TOTAL COST OF REVENUE	242
GROSS PROFIT	362
OPERATING EXPENSES
Selling, general and administrative	264
Research and development	38
Amortization of intangible assets	10
Asset Impairment Charges	0
Restructuring charges, net	14
TOTAL OPERATING EXPENSES	326
OPERATING (LOSS) INCOME	36
Interest expense	(14)
Other income (expense), net	(2)
Reorganization items, net	3,416
(LOSS) INCOME BEFORE INCOME TAXES	3,436
Benefit from (provision for) income taxes	(459)
NET INCOME (LOSS)	$ 2,977
(LOSS) EARNINGS PER SHARE
Net income (loss) per common share - basic (in usd per share) | $ / shares	$ 5.19
Net income (loss) per common share - diluted (in usd per share) | $ / shares	$ 5.19
Weighted average shares outstanding
Weighted average number of shares - basic (in shares) | shares	497.3
Weighted average number of shares - diluted (in shares) | shares	497.3
Predecessor | Products
REVENUE
Revenue	$ 253
COSTS
Total Cost of Goods and Services	84
Amortization of technology intangible assets	3
Predecessor | Services
REVENUE
Revenue	351
COSTS
Total Cost of Goods and Services	$ 155

XML

Consolidated Statements of Comprehensive Income (Loss) Statement - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Net income (loss)		$ (633)	$ (88)	$ 19	$ (637)
Pension, post-retirement and postemployment benefit-related items, net of income taxes of $2 for the three and nine months ended June 30, 2019; and $(58) for the period from October 1, 2017 through December 15, 2017		(6)	0	0	(6)
Cumulative translation adjustment		(10)	(4)	(29)	9
Change in interest rate swaps, net of income taxes of $7 and $18 for the three and nine months ended June 30, 2019; and $3 for the three months ended June 30, 2018 and the period from December 16, 2017 through June 30, 2018		(22)	(12)	(12)	(53)
Other comprehensive (loss) income		(38)	(16)	(41)	(50)
Elimination of Predecessor Company accumulated other comprehensive loss		0	0	0	0
Total comprehensive (loss) income		$ (671)	$ (104)	$ (22)	$ (687)
Predecessor
Net income (loss)	$ 2,977
Pension, post-retirement and postemployment benefit-related items, net of income taxes of $2 for the three and nine months ended June 30, 2019; and $(58) for the period from October 1, 2017 through December 15, 2017	655
Cumulative translation adjustment	3
Change in interest rate swaps, net of income taxes of $7 and $18 for the three and nine months ended June 30, 2019; and $3 for the three months ended June 30, 2018 and the period from December 16, 2017 through June 30, 2018	0
Other comprehensive (loss) income	658
Elimination of Predecessor Company accumulated other comprehensive loss	790
Total comprehensive (loss) income	$ 4,425

XML

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions	2 Months Ended	3 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2019
Change in interest rate swaps, tax		$ 7	$ 18
Predecessor
Pension, post-retirement and postemployment benefit-related items, tax	$ (58)

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2019	Sep. 30, 2018
Statement of Financial Position [Abstract]
Temporary Equity, Carrying Amount, Attributable to Parent	$ 0	$ 0
Current assets:
Cash and cash equivalents	729	700
Accounts receivable, net	276	377
Inventory	71	81
Contract assets	178	0
Contract costs	128	0
Other current assets	149	170
TOTAL CURRENT ASSETS	1,531	1,328
Property, plant and equipment, net	243	250
Deferred income taxes, net	25	29
Intangible assets, net	2,978	3,234
Goodwill	2,105	2,764
Other assets	109	74
TOTAL ASSETS	6,991	7,679
Current liabilities:
Debt maturing within one year	29	29
Accounts payable	292	266
Payroll and benefit obligations	126	145
Contract liabilities	470	484
Business restructuring reserve, current portion	36	51
Other current liabilities	130	148
TOTAL CURRENT LIABILITIES	1,083	1,123
Non-current liabilities:
Long-term debt	3,091	3,097
Pension obligations	619	671
Other post-retirement obligations	181	176
Deferred income taxes, net	120	140
Business restructuring reserve, non-current portion	37	47
Other liabilities	390	374
TOTAL NON-CURRENT LIABILITIES	4,438	4,505
TOTAL LIABILITIES	5,521	5,628
STOCKHOLDER'S DEFICIENCY
Common stock	1	1
Additional paid-in capital	1,756	1,745
Accumulated deficit	(255)	287
Accumulated other comprehensive loss	(32)	18
TOTAL STOCKHOLDER'S DEFICIENCY	1,470	2,051
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY	$ 6,991	$ 7,679

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Sep. 30, 2018
Preferred Stock, Shares Outstanding	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	550,000,000	550,000,000
Common stock, shares issued	110,887,967	110,218,653
Common stock, shares outstanding	110,875,287	110,012,790
Preferred Stock, Par or Stated Value Per Share	$ 0.01
Preferred Stock, Shares Authorized	55,000,000
Preferred Stock, Shares Issued	0	0
Temporary Equity, Par or Stated Value Per Share	$ 0.01	$ 0.01
Temporary Equity, Shares Authorized	55,000,000	55,000,000

XML

Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Series A Preferred Stock	Series A Preferred Stock Additional Paid-in Capital	Series B Preferred Stock	Series B Preferred Stock Additional Paid-in Capital
Beginning Balance (in shares) (Predecessor) at Sep. 30, 2017		494.8
Beginning Balance (Predecessor) at Sep. 30, 2017	$ (5,013)		$ 2,389	$ (5,954)	$ (1,448)
Beginning Balance at Sep. 30, 2017		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Amortization of share-based compensation | Predecessor	3		3
Accrued dividends on Series A preferred stock | Predecessor						$ (2)	$ (2)	$ (4)	$ (4)
Reclassifications to equity awards on redeemable shares | Predecessor	1		1
Net income (loss) | Predecessor	2,977			2,977
Other comprehensive income (loss) | Predecessor	658				658
Cancellation of Predecessor equity (in shares) | Predecessor		(494.8)
Cancellation of Predecessor equity | Predecessor	(1,380)		(2,387)	(2,977)	(790)
Ending Balance (Predecessor) at Dec. 15, 2017	1,668	$ 1	1,667	0	0
Ending Balance at Dec. 15, 2017	1,668	$ 1	1,667	0	0
Ending Balance (in shares) (Predecessor) at Dec. 15, 2017		110.0
Ending Balance (in shares) at Dec. 15, 2017		110.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance as of December 15, 2017 (Predecessor) (in shares) | Predecessor		494.8
Balance as of December 15, 2017 (Predecessor) | Predecessor	(1,380)		2,387	(2,977)	(790)
Common stock issued for Predecessor debt (in shares) | Predecessor		103.9
Common stock issued for Predecessor debt | Predecessor	1,576	$ 1	1,575
Common stock issued for Pension Benefit Guaranty Corporation (in shares) | Predecessor		6.1
Common stock issued for Pension Benefit Guaranty Corporation | Predecessor	92		92
Net income (loss)	19
Other comprehensive income (loss)	(41)				(41)
Ending Balance at Jun. 30, 2018	1,718	$ 1	1,739	19	(41)
Ending Balance (in shares) at Jun. 30, 2018		110.2
Beginning Balance at Mar. 31, 2018					(25)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net of shares redeemed and canceled, under employee stock option plan (in shares)		0.2
Amortization of share-based compensation	7		7
Net income (loss)	(88)			(88)
Other comprehensive income (loss)	(16)				(16)
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(2)		(2)
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt	67		67
Adjustments To Additional Paid In Capital, Derivative Transactions Connected With Contingently Convertible Securities, Purchase Of Convertible Note Bond Hedge, Net	(64)		(64)
Adjustments to Additional Paid in Capital, Warrant Issued	58		58
Ending Balance at Jun. 30, 2018	1,718	$ 1	1,739	19	(41)
Ending Balance (in shares) at Jun. 30, 2018		110.2
Beginning Balance (in shares) at Sep. 30, 2018		110.2
Beginning Balance at Sep. 30, 2018	2,051	$ 1	1,745	287	18
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net of shares redeemed and canceled, under employee stock option plan (in shares)		0.8
Issuance of common stock, net of shares redeemed and canceled, under employee stock option plan	0
Stock Repurchased During Period, Shares		(0.3)
Amortization of share-based compensation	6		6
Net income (loss)	9
Other comprehensive income (loss)	(20)				(20)
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(6)		(6)
Ending Balance at Dec. 31, 2018	2,132	$ 1	1,745	388	(2)
Ending Balance (in shares) at Dec. 31, 2018		110.7
Beginning Balance (in shares) at Sep. 30, 2018		110.2
Beginning Balance at Sep. 30, 2018	2,051	$ 1	1,745	287	18
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(637)
Net income (loss) | Accounting Standards Update 2014-09 [Member]	(746)
Other comprehensive income (loss)	(50)				(50)
Ending Balance at Jun. 30, 2019	1,470	$ 1	1,756	(255)	(32)
Ending Balance (in shares) at Jun. 30, 2019		110.9
Beginning Balance (in shares) at Dec. 31, 2018		110.7
Beginning Balance at Dec. 31, 2018	2,132	$ 1	1,745	388	(2)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Amortization of share-based compensation	5		5
Net income (loss)	(13)
Other comprehensive income (loss)	8				8
Ending Balance at Mar. 31, 2019	2,135	$ 1	1,750	378	6
Ending Balance (in shares) at Mar. 31, 2019		110.7
Increase (Decrease) in Stockholders' Equity [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | Accounting Standards Update 2014-09 [Member]	3			3
Issuance of common stock, net of shares redeemed and canceled, under employee stock option plan (in shares)		0.3
Issuance of common stock, net of shares redeemed and canceled, under employee stock option plan	0
Stock Repurchased During Period, Shares		(0.1)
Amortization of share-based compensation	8		8
Net income (loss)	(633)
Net income (loss) | Accounting Standards Update 2014-09 [Member]	(703)
Other comprehensive income (loss)	(38)				(38)
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(2)		(2)
Ending Balance at Jun. 30, 2019	$ 1,470	$ 1	$ 1,756	(255)	$ (32)
Ending Balance (in shares) at Jun. 30, 2019		110.9
Increase (Decrease) in Stockholders' Equity [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | Accounting Standards Update 2014-09 [Member]				$ 3

XML

Consolidated Statements of Cash Flows $ in Millions	2 Months Ended	7 Months Ended	9 Months Ended
	Dec. 15, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)
OPERATING ACTIVITIES:
Net income (loss)		$ 19	$ (637)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Depreciation and amortization		264	335
Share-based compensation		13	19
Amortization of debt issuance costs		1	12
Accretion of debt discount		2	4
Deferred income taxes, net		(207)	(27)
Asset Impairment Charges		0	659
Change in fair value of emergence date warrants		9	(28)
Unrealized loss (gain) on foreign currency transactions		(33)	9
Other non-cash charges, net		3	7
Reorganization items:
Net gain on settlement of Liabilities subject to compromise		0	0
Payment to Pension Benefit Guaranty Corporation		0	0
Payment to pension trust		0	0
Payment of unsecured claims		0	0
Fresh start adjustments, net		0	0
Non-cash and financing related reorganization items, net		0	0
Increase (Decrease) in Receivables		(23)	(100)
Changes in operating assets and liabilities:
Inventory		24	(14)
Contract assets		0	(99)
Increase (Decrease) In Capitalized Contract Costs, Net		0	(26)
Accounts payable		42	27
Payroll and benefit obligations		(73)	(66)
Business restructuring reserve		39	(23)
Contract liabilities		149	26
Other assets and liabilities		(98)	(103)
NET CASH PROVIDED BY OPERATING ACTIVITIES		177	175
INVESTING ACTIVITIES:
Capital expenditures		(36)	(84)
Payments to Acquire Businesses, Net of Cash Acquired		(157)	0
Payments to Acquire Investments		0	(10)
Other investing activities, net		1	(1)
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES		(192)	(95)
FINANCING ACTIVITIES:
Proceeds from Issuance of Warrants		58	0
Payments for Hedge, Financing Activities		(84)	0
Repayment of debtor-in-possession financing		0	0
Repayment of first lien debt		0	0
Repayment of long-term debt		(15)	(22)
Debt issuance costs		(10)	0
Payment for Contingent Consideration Liability, Financing Activities		0	(9)
Payments related to sale-leaseback transactions		(7)	(10)
Other financing activities, net		(1)	(10)
NET CASH USED FOR FINANCING ACTIVITIES		284	(51)
Effect of exchange rate changes on cash and cash equivalents		(5)	1
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		264	30
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	$ 435	699	734
Term Loan Credit Agreement due December 15, 2024
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement		0	0
Term Loan Credit Agreement Due To Refinancing [Member]
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement		2,911	0
Repayment of long-term debt		(2,918)	0
Convertible Notes [Member]
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement		350	$ 0
Predecessor
OPERATING ACTIVITIES:
Net income (loss)	2,977
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Depreciation and amortization	31
Share-based compensation	0
Amortization of debt issuance costs	0
Accretion of debt discount	0
Deferred income taxes, net	455
Asset Impairment Charges	0
Change in fair value of emergence date warrants	0
Unrealized loss (gain) on foreign currency transactions	0
Other non-cash charges, net	0
Reorganization items:
Net gain on settlement of Liabilities subject to compromise	(1,778)
Payment to Pension Benefit Guaranty Corporation	(340)
Payment to pension trust	(49)
Payment of unsecured claims	(58)
Fresh start adjustments, net	(1,697)
Non-cash and financing related reorganization items, net	26
Increase (Decrease) in Receivables	(40)
Changes in operating assets and liabilities:
Inventory	(2)
Contract assets	0
Increase (Decrease) In Capitalized Contract Costs, Net	0
Accounts payable	(40)
Payroll and benefit obligations	16
Business restructuring reserve	(7)
Contract liabilities	28
Other assets and liabilities	(16)
NET CASH PROVIDED BY OPERATING ACTIVITIES	(414)
INVESTING ACTIVITIES:
Capital expenditures	(13)
Payments to Acquire Businesses, Net of Cash Acquired	0
Payments to Acquire Investments		$ 0
Other investing activities, net	0
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES	(13)
FINANCING ACTIVITIES:
Proceeds from Issuance of Warrants	0
Payments for Hedge, Financing Activities	0
Repayment of debtor-in-possession financing	(725)
Repayment of first lien debt	(2,061)
Repayment of long-term debt	(111)
Debt issuance costs	(97)
Payment for Contingent Consideration Liability, Financing Activities	0
Payments related to sale-leaseback transactions	(4)
Other financing activities, net	0
NET CASH USED FOR FINANCING ACTIVITIES	(102)
Effect of exchange rate changes on cash and cash equivalents	(2)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(531)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	435
Predecessor | Term Loan Credit Agreement due December 15, 2024
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement	2,896
Predecessor | Term Loan Credit Agreement Due To Refinancing [Member]
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement	0
Repayment of long-term debt	0
Predecessor | Convertible Notes [Member]
FINANCING ACTIVITIES:
Proceeds from Term Loan Credit Agreement	$ 0

XML

Background and Basis of Presentation

9 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

Background

Avaya Holdings Corp. (the "Parent" or "Avaya Holdings"), together with its consolidated subsidiaries (collectively, the "Company" or "Avaya"), is a global leader in digital communications products, solutions and services for businesses of all sizes. Avaya builds open, converged and innovative solutions to enhance and simplify communications and collaboration in the cloud, on-premises or a hybrid of both. The Company's global team of professionals delivers services from initial planning and design, to implementation and integration, to ongoing managed operations, optimization, training and support. Currently, the Company manages its business operations in two segments, Products & Solutions and Services. The Company sells directly through its worldwide sales force and indirectly through its global network of channel partners, including distributors, service providers, dealers, value-added resellers, system integrators and business partners that provide sales and services support.

Basis of Presentation

Avaya Holdings has no material assets or standalone operations other than its ownership of Avaya Inc. and its subsidiaries. The accompanying unaudited interim Condensed Consolidated Financial Statements as of June 30, 2019 and for the nine months ended June 30, 2019, the period from December 16, 2017 through June 30, 2018, and the period from October 1, 2017 through December 15, 2017, reflect the operating results of Avaya Holdings and its consolidated subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial statements, and should be read in conjunction with the audited Consolidated Financial Statements and other financial information for the fiscal year ended September 30, 2018, included in the Company's Annual Report on Form 10-K filed with the SEC on December 21, 2018. In management's opinion, these unaudited interim Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary to state fairly the results of operations, financial position and cash flows for the periods indicated. The condensed consolidated results of operations for the interim periods reported are not necessarily indicative of the results for the entire fiscal year.

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the periods reported. These estimates include assessing the collectability of accounts receivable, sales returns and allowances, the use and recoverability of inventory, the realization of deferred tax assets, business restructuring reserves, pension and post-retirement benefit costs, the fair value of equity compensation, the fair value of assets and liabilities in connection with fresh start accounting as well as those acquired in business combinations, the recoverability of long-lived assets, useful lives and impairment of tangible and intangible assets including goodwill, the amount of exposure from potential loss contingencies, and fair value measurements, among others. The markets for the Company's products are characterized by intense competition, rapid technological development and frequent new product introductions, all of which could affect the future recoverability of the Company's assets. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Actual results may differ from these estimates.

During the nine months ended June 30, 2019, the Company recorded out-of-period adjustments to correct Selling, general and administrative expense. The impact resulted in a $6 million increase to Selling, general and administrative expense and a decrease to net income of $4 million for the nine months ended June 30, 2019. Management concluded that the correction was not material to any previously issued consolidated financial statements or to the nine months ended June 30, 2019.

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared on a basis that assumes that the Company will continue as a going concern and contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

On January 19, 2017 (the "Petition Date"), Avaya Holdings, together with certain of its affiliates, namely Avaya CALA Inc., Avaya EMEA Ltd., Avaya Federal Solutions, Inc., Avaya Holdings LLC, Avaya Holdings Two, LLC, Avaya Inc., Avaya Integrated Cabinet Solutions Inc. (n/k/a Avaya Integrated Cabinet Solutions LLC), Avaya Management Services Inc., Avaya Services Inc., Avaya World Services Inc., Octel Communications LLC, Sierra Asia Pacific Inc., Sierra Communication International LLC, Technology Corporation of America, Inc., Ubiquity Software Corporation, VPNet Technologies, Inc. and Zang, Inc. (n/k/a Avaya Cloud Inc.) (the "Debtors"), filed voluntary petitions for relief (the "Bankruptcy Filing") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The cases were jointly administered as Case No. 17-10089 (SMB). The Bankruptcy Court confirmed the Company's Second Amended Joint Chapter 11 Plan of Reorganization of Avaya Inc. and its Debtor Affiliates filed on October 24, 2017 (the "Plan of Reorganization") on November 28, 2017. Confirmation of the Plan of Reorganization resulted in the discharge of certain claims against the Company that arose before the Petition Date and terminated all rights and interests of equity security holders as provided for in the Plan of Reorganization. The Debtors operated their businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 of the Bankruptcy Code and the orders of the Bankruptcy Court until the Plan of Reorganization was substantially consummated and they emerged from bankruptcy on December 15, 2017 (the "Emergence Date").

On the Emergence Date, the Company applied fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the Condensed Consolidated Financial Statements after the Emergence Date are not comparable with the Condensed Consolidated Financial Statements on or before that date.

References to "Successor" or "Successor Company" relate to the financial position and results of operations of the reorganized Avaya Holdings after the Emergence Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of Avaya Holdings on or before the Emergence Date.

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Recent Accounting Pronouncements

9 Months Ended

Jun. 30, 2019

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." This standard clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this standard as of October 1, 2018 on a prospective basis. The adoption of this standard did not have an impact on the Company's Condensed Consolidated Financial Statements, however, the future impact of the standard will depend on the nature of any future acquisitions or dispositions made by the Company.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash." This standard requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard as of October 1, 2018 applying the retrospective transition method to each period presented. The adoption resulted in an increase of Net cash used for investing activities of $55 million and $21 million for the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor), respectively.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." This standard addresses the appropriate classification of certain cash flows as operating, investing, or financing. The Company adopted this standard as of October 1, 2018 applying the retrospective transition method to each accounting period presented. The adoption of the standard did not have a material impact on the Company's Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"). This standard superseded most of the previous revenue recognition guidance under GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue recognition. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. The Company adopted ASC 606 as of October 1, 2018 using the modified retrospective transition method applied to all open contracts with customers that were not completed as of September 30, 2018.

Upon adoption of ASC 606, sales that include professional services, are generally recognized as the services are performed as opposed to upon completion and acceptance of the project. When such arrangements include products, products revenue is generally recognized when the products are delivered as opposed to upon completion and acceptance of the project. Additionally, for cloud and managed services arrangements pursuant to which the customer purchases and owns the solution and Avaya provides the software as a service ("SaaS"), control of the software generally transfers to the customer and the related revenue is recognized, at the point-in-time the SaaS commences. Revenue recognition related to stand-alone product shipments, maintenance services, and certain cloud offerings remains substantially unchanged. In addition to the impacts on revenue recognition, the standard requires incremental contract acquisition costs (primarily sales commissions) to be capitalized and amortized on a systematic basis that is consistent with the transfer of goods or services to which the asset relates. These costs were formerly expensed as incurred. The impact of adopting ASC 606 is dependent upon contract-specific terms and the Company has chosen to use the allowed practical expedient, whereby incremental contract acquisition costs with an amortization period of one year or less are expensed as incurred.

On October 1, 2018, the beginning of the Company's fiscal 2019, the Company recorded a net increase to the opening Retained earnings balance of $92 million, net of tax, due to the cumulative impact of adopting ASC 606. During the nine months ended June 30, 2019, the Company recorded a $3 million adjustment to correct the ASC 606 impact that was recorded to Retained earnings on October 1, 2018. In connection with this adjustment, the Company also recorded an out-of-period adjustment during the nine months ended June 30, 2019 to correct goodwill recognized upon the application of fresh start accounting, which resulted in a $2 million decrease to Contract liabilities and a $2 million decrease to Goodwill. Management concluded that these corrections were not material to previously issued consolidated financial statements and to the three and nine months ended June 30, 2019.

The revised net increase to Retained earnings due to the cumulative impact of adopting ASC 606 was $95 million, net of tax. The increase to Retained earnings included $97 million for the portion of the transaction price that would have been recognized as revenue under prior guidance (ASC "605"). These amounts will not be recognized as revenue in future periods and are primarily attributable to open contracts that contained professional services, both on a stand-alone basis and when sold together with hardware and software, for which revenue recognition was deferred until project completion under ASC 605.

The impact of the adoption of ASC 606 on the September 30, 2018 Condensed Consolidated Balance Sheet was as follows:

(In millions)	September 30, 2018 As Reported		Adjustments			Upon Adoption of ASC 606
ASSETS
Accounts receivable, net	$	377	$	(1	)	$	376
Inventory	81		(24		)	57
Contract assets	—		78			78
Contract costs	—		109			109
Other current assets	170		(66		)	104
Property, plant and equipment, net	250		(1		)	249
Deferred income taxes, net	29		(2		)	27
Other assets	74		16			90
LIABILITIES
Contract liabilities	484		(17		)	467
Other current liabilities	148		4			152
Deferred income taxes, net	140		29			169
Other liabilities	374		(2		)	372
STOCKHOLDERS' EQUITY
Retained earnings	287		95			382

For additional information refer to Note 3, "Revenue Recognition," for disclosures related to the adoption of ASC 606 and an updated accounting policy related to revenue recognition and contract costs.

Recent Standards Not Yet Effective

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract." This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for the Company in the first quarter of fiscal 2021, with early adoption permitted. The Company is currently assessing the impact the new guidance will have on its Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. This update removes disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. This standard is effective for the Company beginning in fiscal 2021, with early adoption permitted. The amendments in the standard need to be applied on a retrospective basis. The Company is currently assessing the impact of the standard on its disclosures.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." This standard modifies the disclosure requirements on fair value measurements by removing certain disclosures, modifying certain disclosures and adding additional disclosures. This standard is effective for the Company beginning in the first quarter of fiscal 2021. Certain disclosures in the standard need to be applied on a retrospective basis and others on a prospective basis. The Company is currently assessing the impact of the standard on its disclosures.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This standard allows companies to reclassify from accumulated other comprehensive income to retained earnings any stranded tax benefits resulting from the enactment of the Tax Cuts and Jobs Act. This standard is effective for the Company beginning in the first quarter of fiscal 2020. The Company is currently evaluating the impact that the adoption of this standard may have on its Condensed Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This standard, along with other guidance subsequently issued by the FASB, requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This standard is effective for the Company in the first quarter of fiscal 2021 on a prospective basis. The Company is currently evaluating the impact that the adoption of this standard may have on its Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This standard, along with other guidance subsequently issued by the FASB, requires lessees to recognize lease assets and liabilities for all leases with lease terms of more than 12 months. The standard makes similar changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. Presentation of leases within the statements of operations and statements of cash flows will primarily depend on its classification as a finance or operating lease. This standard is effective for the Company in the first quarter of fiscal 2020 with early adoption permitted. The Company expects to adopt this standard on October 1, 2019 using a modified retrospective transition method as of the beginning of the period of adoption and is continuing to evaluate the impact of this standard on its Condensed Consolidated Financial Statements.

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Revenue Recognition

9 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

On October 1, 2018, the Company adopted ASC 606 using the modified retrospective transition method. Accordingly, the impact of adoption was recorded as an adjustment to Retained earnings as of October 1, 2018 and represents the difference between ASC 606 and ASC 605 applied to all open contracts with customers that were not completed as of September 30, 2018. Under the modified retrospective method, results for reporting periods beginning after September 30, 2018 are presented under ASC 606 while prior period financial information is not adjusted and continues to be reported in accordance with ASC 605. The Company elected to use the contract modification practical expedient, whereby all contract modifications for each contract before October 1, 2018 are aggregated and evaluated at the adoption date.

Impact of ASC 606 on Financial Statement Line Items

The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Balance Sheet as of June 30, 2019 is as follows:

	June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606
ASSETS
Inventory	$	71		$	33		$	104
Contract assets	178			(178		)	—
Contract costs	128			(128		)	—
Other current assets	149			100			249
Property, plant and equipment, net	243			1			244
Deferred income taxes, net	25			2			27
Other assets	109			(10		)	99
LIABILITIES
Accounts payable	292			(1		)	291
Contract liabilities	470			48			518
Other current liabilities	130			4			134
Deferred income taxes, net	120			(29		)	91
Other liabilities	390			2			392
STOCKHOLDERS' EQUITY
Retained earnings	(255		)	(204		)	(459		)

The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Statements of Operations for the three and nine months endedJune 30, 2019 is as follows:

	Three months ended June 30, 2019									Nine months ended June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606			As Reported			Adjustments			Without Adoption of ASC 606
REVENUE
Products	$	297		$	(26	)	$	271		$	908		$	(71	)	$	837
Services	420			(19		)	401			1,256			(60		)	1,196
	717			(45		)	672			2,164			(131		)	2,033
COSTS
Products:
Costs	109			(4		)	105			329			(13		)	316
Amortization of technology intangible assets	43			—			43			130			—			130
Services	175			(7		)	168			522			(20		)	502
	327			(11		)	316			981			(33		)	948
GROSS PROFIT	390			(34		)	356			1,183			(98		)	1,085
OPERATING EXPENSES
Selling, general and administrative	253			(1		)	252			761			3			764
Research and development	49			—			49			154			—			154
Amortization of intangible assets	41			—			41			122			—			122
Impairment charges	659			—			659			659			—			659
Restructuring charges, net	1			—			1			12			—			12
	1,003			(1		)	1,002			1,708			3			1,711
OPERATING LOSS	(613		)	(33		)	(646		)	(525		)	(101		)	(626		)
Interest expense	(59		)	—			(59		)	(177		)	—			(177		)
Other income, net	12			—			12			35			—			35
LOSS BEFORE INCOME TAXES	(660		)	(33		)	(693		)	(667		)	(101		)	(768		)
Benefit from (provision for) income taxes	27			(37		)	(10		)	30			(8		)	22
NET LOSS	$	(633	)	$	(70	)	$	(703	)	$	(637	)	$	(109	)	$	(746	)

The adoption of ASC 606 did not impact net cash provided by or used for operating, investing, or financing activities within the Condensed Consolidated Statement of Cash Flows for the nine months ended June 30, 2019.

Revenue Recognition Policy

The Company derives revenue primarily from the sale of products and services for communications systems and applications. The Company sells directly through its worldwide sales force and indirectly through its global network of channel partners, including distributors, service providers, dealers, value-added resellers, systems integrators and business partners that provide sales and services support.

In accordance with ASC 606, the Company accounts for a customer contract when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance and it is at least probable that the Company will collect the consideration to which it is entitled. Revenue is recognized upon the transfer of control of the promised products and services to customers. Judgment is required in instances where the Company’s contracts include multiple products and services to determine whether each should be accounted for as a separate performance obligation. The Company enters into contracts that include various combinations of products and services, each of which is generally capable of being distinct as well as distinct within the context of the contracts.

Customer contracts are typically made pursuant to purchase orders and statements of work based on master purchase or partner agreements. Invoicing typically occurs upon customer acceptance or monthly for a series of services. Payment is due based on the Company’s standard payment terms which are typically within 30 to 60 days of invoice issuance. The Company does not typically provide financing arrangements to customers. For certain services and customer types, customers will remit payment before the services are provided. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determined that contracts do not include a significant financing component. The primary purpose of the invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, not to receive financing from or to provide financing to customers. Certain contracts include performance obligations accounted for as a series which also include variable consideration (primarily usage-based fees). For these arrangements, variable consideration is not estimated and allocated to the entire performance obligation, rather the variable fees are recognized in the period in which the usage occurs in accordance with the "right to invoice" practical expedient.

The total transaction price for each contract is determined based on the total consideration specified in the contract, including variable consideration such as sales incentives and other discounts. The expected value method is generally used when estimating variable consideration, which typically reduces the total transaction price due to the nature of the elements to which the variable consideration relates. These estimates reflect the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying patterns. The Company excludes from the transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts are not included as a component of net sales or cost of sales.The expected value method requires judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each performance obligation. Depending on the facts and circumstances, a change in variable consideration estimate will either be accounted for at the contract level or using the portfolio method, in accordance with the prescribed practical expedient. Reserves for contractual stock rotation rights to channel partners to support the management of inventory and certain other sales incentives are determined using the portfolio method. The Company also considers the customers’ rights of return in determining the transaction price where applicable.

The Company allocates the transaction price to each performance obligation based on its relative standalone selling price and recognizes revenue as each performance obligation is satisfied. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company uses a range of selling prices to estimate standalone selling price when each of the products and services is sold separately. The Company typically has more than one standalone selling price for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the standalone selling price. In instances where standalone selling price is not directly observable, such as when we do not sell the product or service separately, the Company determines the standalone selling price using information that may include market conditions and other observable inputs.

Amounts billed to customers for shipping and handling activities are considered contract fulfillment activities and not a separate performance obligation of the contract. Shipping and handling fees are recorded as revenue and the related cost is a cost to fulfill the contract.

Contract modifications are accounted for as separate contracts if the additional products and services are distinct and priced at standalone selling prices. If the additional products and services are distinct, but not priced at standalone selling prices, the modification is treated as a termination of the existing contract and the creation of a new contract. Lastly, if the additional products and services are not distinct within the context of the contract, the modification is combined with the original contract and either an increase or decrease in revenue is recognized on the modification date. During the three and nine months endedJune 30, 2019, the Company recognized revenue of $5 million for contracts modified during the period that had performance obligations satisfied in prior periods.

Software

The Company’s software licenses provide users with access to capabilities such as voice, video, conferencing, messaging and collaboration. Software licenses also add functionality to the Company’s hardware. The Company’s software licenses for on-premise customer software provide the customer with a right to use the software as it exists when it is made available to the customer and are accounted for as distinct performance obligations. The Company’s software licenses are sold through both direct and indirect channels with terms that are either perpetual or time based, both of which provide the end-user with the same functionality. The main difference between perpetual and term licenses is the duration over which the customer benefits from the software. Revenue from on-premise customer software licenses is generally recognized at the point-in-time the software is made available to the customer, via direct sale to the end-user or indirect sale to a channel partner, based on the fixed minimum revenue commitment under the arrangement. However, revenue cannot be recognized before the beginning of the period during which the customer can use and benefit from the license. In instances where the Company’s software licenses include a usage-based fee, revenue associated with the incremental usage is recognized at the point-in-time the incremental usage occurs.

Hardware

The Company’s hardware, phones, gateways, and servers, each of which has a stand-alone functionality, are generally considered distinct performance obligations. Hardware is sold through both direct and indirect channels and revenue is recognized at the point-in-time at which control of the product is transferred to the customer, via direct sale to the end-user or indirect sale to a channel partner, generally upon delivery, as defined in the contract.

Global Support Services

The Company’s global support services provide supplemental maintenance options to end-users in support of the Company’s products and solutions, including when and if available upgrade rights and maintenance for hardware. These services are typically accounted for as distinct performance obligations. Given that global support services consist of a series of distinct promises that are satisfied over time in the form of a single performance obligation comprised of a stand-ready obligation, these services are generally recognized ratably over the period during which the services are performed as customers simultaneously consume and receive benefits. Maintenance contracts typically have terms that range from one to five years.

Professional Services

The Company’s professional services include the design, implementation and development of communication solutions. Professional services are sold through the Company’s direct and indirect channels either on a stand-alone basis or with other hardware, software and services and are generally accounted for as distinct performance obligations. Revenue for professional services is generally recognized over time based on the cost of effort incurred to date relative to the total cost of effort expected to be incurred as customers simultaneously consume and receive benefits. Effort incurred generally represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contracts for professional services typically have terms that range from four to six weeks for simple engagements and from six months to one year for more complex engagements.

Cloud and Managed Services

The Company’s managed services provide additional support options to end-users on top of the Company’s supplemental maintenance services, including hardware support, help-desk routing and system monitoring services. The Company’s managed services are sold either on a stand-alone basis or together with the Company’s hardware, software and other services, and are generally accounted for as distinct performance obligations. The Company’s managed services are provided through both direct and indirect channels. Managed services consist of a series of distinct promises that are satisfied over time in the form of a single performance obligation comprised of a stand-ready obligation. Contracts for managed services typically have terms that range from one to five years.

The Company’s cloud offerings enable customers to take advantage of our technology via the cloud, on-premises, or a hybrid of both. The software that enables the core communications functionality is offered both as a sale of perpetual or time based licenses or through a SaaS. Cloud offerings can include supplemental maintenance and managed services and are sold through the Company’s direct and indirect channels.

Cloud and managed services offerings often include multiple performance obligations. Each performance obligation can itself include a series of distinct promises that are satisfied over time. Total consideration for a project is allocated to each performance obligation, with revenue recognized ratably over the period during which the services are performed as customers simultaneously consume and receive benefits. Variable consideration from incremental usage above a fixed fee is recognized at the point-in-time at which the usage occurs.

Warranties

The Company offers standard limited warranties that provide the customer with assurance that its products will function in accordance with contract specifications. The Company’s standard limited warranties are not sold separately but are included with each customer purchase. Warranties are not considered separate performance obligations, and therefore, warranty expense is accrued at the time the related revenue is recognized.

Disaggregation of Revenue

The following tables provide the Company's disaggregated revenue for the three and nine months endedJune 30, 2019:

(In millions)	Three months ended June 30, 2019			Nine months ended June 30, 2019
REVENUE
Products & Solutions	$	298		$	913
Services	422			1,269
Unallocated Amounts	(3		)	(18		)
	$	717		$	2,164

	Three months ended June 30, 2019
(In millions)	Products & Solutions		Services		Unallocated			Total
Revenue:
U.S.	$	149	$	245	$	(2	)	$	392
International:
Europe, Middle East and Africa	91		93		(1		)	183
Asia Pacific	38		47		—			85
Americas International - Canada and Latin America	20		37		—			57
Total International	149		177		(1		)	325
Total revenue	$	298	$	422	$	(3	)	$	717

	Nine months ended June 30, 2019
(In millions)	Products & Solutions		Services		Unallocated			Total
Revenue:
U.S.	$	429	$	744	$	(12	)	$	1,161
International:
Europe, Middle East and Africa	290		283		(3		)	570
Asia Pacific	113		131		(2		)	242
Americas International - Canada and Latin America	81		111		(1		)	191
Total International	484		525		(6		)	1,003
Total revenue	$	913	$	1,269	$	(18	)	$	2,164

Unallocated amounts represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

Transaction Price Allocated to the Remaining Performance Obligations

Transaction price allocated to remaining performance obligations that are wholly or partially unsatisfied as of June 30, 2019 is $2.7 billion, of which 57% and 27% is expected to be recognized within 12 months and 13-24 months, respectively, with the remaining balance recognized thereafter. This excludes amounts for remaining performance obligations that are (1) for contracts recognized over time using the "right to invoice" practical expedient, (2) related to sales or usage based royalties promised in exchange for a license of intellectual property, and (3) related to variable consideration allocated entirely to a wholly unsatisfied performance obligation.

Contract Balances

The Company records a contract asset when revenue is recognized in advance of the right to bill, pursuant to customer contract terms. The contract asset decreases when the Company has the right to bill the customer which is generally triggered by the satisfaction of additional performance obligations or contract milestones. The Company records a contract liability when payment is received from the customer in advance of the Company satisfying a performance obligation and the contract liability is reduced as performance obligations are satisfied and revenue is recognized. The Company records the net contract asset or liability position for each customer contract.

The following table provides information about accounts receivable, contract assets and contract liabilities for the periods presented:

(In millions)	June 30, 2019		October 1, 2018		Increase (Decrease)
Accounts receivable, net	$	276	$	376	$	(100	)
Contract assets:
Current	$	178	$	78	$	100
Non-current (Other assets)	3		3		—
	$	181	$	81	$	100
Cost of obtaining a contract:
Current (Contract costs)	$	88	$	64	$	24
Non-current (Other assets)	44		36		8
	$	132	$	100	$	32
Cost to fulfill a contract:
Current (Contract costs)	$	40	$	45	$	(5	)
Contract liabilities:
Current	$	470	$	467	$	3
Non-current (Other liabilities)	76		52		24
	$	546	$	519	$	27

The change in contract assets and contract liabilities primarily results from the timing difference between the Company’s satisfaction of a performance obligation and the timing of the payment from the customer. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. The Company recognizes a contract asset when it transfers products and services to a customer in advance of scheduled billings. Contract assets decrease when the Company invoices the customer or the right to receive consideration is unconditional. The Company did not record any asset impairment charges related to contract assets during the nine months ended June 30, 2019. Contract liabilities are recorded when the Company receives payment from the customer in advance of the Company’s completion of performance obligation(s). During the three and nine months endedJune 30, 2019, the Company recognized revenue of $109 million and $505 million, respectively, that had been recorded as a Contract liability at October 1, 2018.

Contract Costs

The Company capitalizes direct and incremental costs incurred to obtain and to fulfill a contract, such as sales commissions and products and services, respectively. These costs are recognized as an asset if the Company expects to recover them and are amortized consistent with the transfer to the customer of the underlying performance obligations. Costs to obtain a contract are amortized using the portfolio approach over the average term of the customer contracts, which corresponds to the period of benefit. Costs incurred to obtain a contract with an amortization period of one year or less are expensed as incurred, in accordance with the prescribed practical expedient. For the three months ended June 30, 2019, the Company recognized $27 million for amortization of costs to obtain customer contracts, which was included in Selling, general and administrative expense. For the nine months ended June 30, 2019, the Company recognized $73 million for amortization of costs to obtain customer contracts, of which $70 million was included in Selling, general and administrative expense and the remaining $3 million was a reduction to Revenue.

Contract fulfillment costs are recognized consistent with the transfer to the customer of the underlying performance obligations based on the specific contracts to which they relate. For the three and nine months endedJune 30, 2019, the Company recognized $11 million and $31 million of contract fulfillment costs within Costs, respectively.

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Business Combinations

9 Months Ended

Jun. 30, 2019

Business Acquisition [Line Items]

Investment [Text Block]

Strategic Investments

On May 20, 2019, the Company made a $10 million investment in a unified communications as a service (“UCaaS”) provider delivering public sector Federal Risk and Authorization Management Program ("FedRAMP") security requirements (the “Strategic Investment”) through the acquisition of a 3-year convertible note (“Promissory Note”). The Strategic Investment offers hosted, cloud-based Voice over Internet Protocol infrastructure services and a FedRAMP authorized hosting platform. The Strategic Investment will use the proceeds from the issuance of the Promissory Note to help fund its working capital.

The Promissory Note has a principal amount of $10 million, bears interest at a rate of 8% per annum and has a maturity date of May 20, 2022. Under the terms of the Promissory Note, the Company may, at its sole discretion, convert its interest in the Promissory Note into newly issued Class D units of the Strategic Investment representing no less than 27.3% of the Strategic Investment's fully diluted capitalization at the time of the conversion. On or after the Promissory Note’s maturity date, the Company shall have the option, at its sole discretion, to demand payment from the Strategic Investment for the unpaid principal and accrued interest on the Promissory Note. In conjunction with the Promissory Note, the Company entered into a separate agreement with the Strategic Investment and its equity holders which provides the Company with an option to purchase from such equity holders any or all of the outstanding LLC units of the Strategic Investment for prices specified in the relevant agreement. The option is exercisable upon the earlier of December 31, 2021 or the Strategic Investment reaching specified milestones. The option does not currently convey power to the Company as it is not currently exercisable and requires significant economic outlay.

The Promissory Note is classified as an available-for-sale security as of June 30, 2019 with a carrying value and fair value of $10 million and is recorded within Other Assets in the Condensed Consolidated Balance Sheets. Although the Company maintains a variable interest in the Strategic Investment, it is not the primary beneficiary as it does not direct the activities that most significantly impact the economic performance of the Strategic Investment through the rights maintained with the Promissory Note or separate agreement. As of June 30, 2019, the Company's maximum exposure to loss as a result of its involvement with the Strategic Investment is limited to the initial investment in the Promissory Note of $10 million.

Business Combination Disclosure [Text Block]

Business Combinations

On March 9, 2018 (the "Acquisition Date"), the Company acquired Intellisist, Inc. ("Spoken"), a United States-based private technology company, which provides cloud-based Contact Center as a Service solutions and customer experience management and automation applications. The total purchase price was $172 million, consisting of $157 million in cash, $14 million in contingent consideration and a $1 million settlement of Spoken’s net payable to the Company which mainly related to services provided by the Company to Spoken under a co-development partnership prior to the acquisition.

Upon the achievement of three specified performance targets ("Earn-outs"), the Company is required to pay up to $16 million of contingent consideration to Spoken's former owners and employees and up to $4 million in discretionary earn-out bonuses ("Earn-out Bonuses") to Spoken employees who have contributed to the achievement of the Earn-outs. The fair value of the Earn-outs at the Acquisition Date was $14 million, which was calculated using a probability-weighted discounted cash flow model and is remeasured to fair value at each subsequent reporting period. The Earn-out Bonuses, which are intended to incentivize continuing employees to assist in achieving the Earn-outs, are excluded from the acquisition consideration and are recognized as compensation expense in the Company's Condensed Consolidated Financial Statements ratably over the estimated Earn-out periods. During the nine months ended June 30, 2019, the Company paid $11 million and $2 million for Earn-outs and Earn-out Bonuses, respectively, related to the achievement of two of the three Earn-out targets. The third Earn-out target was completed during the three months ended June 30, 2019 and the corresponding Earn-out and Earn-out Bonuses are expected to be paid by the Company during the remainder of fiscal 2019. As of June 30, 2019, the fair value of the Earn-out liability was $5 million.

In connection with this acquisition, the Company recorded goodwill of $117 million, which was assigned to the Products & Solutions segment, identifiable intangible assets with a fair value of $64 million, and other net liabilities of $9 million. The goodwill recognized is attributable primarily to the potential that the Spoken technology, cloud platform and assembled workforce will accelerate the Company's growth in cloud-based solutions. The Company determined that the goodwill is not deductible for tax purposes.

The acquired intangible assets of $64 million included technology and patents of $56 million with a weighted average useful life of 4.9 years, $5 million of in-process research and development ("IPR&D") activities, which are considered indefinite lived until projects are completed or abandoned, and customer relationships of $3 million with a weighted average useful life of 7.5 years. During the nine months ended June 30, 2019, $3 million of the acquired IPR&D activities have been completed and are being amortized over a weighted average useful life of 5.0 years and $2 million were abandoned and written off (see Note 5).

Spoken became a wholly-owned subsidiary of the Company on March 9, 2018. The Company's Condensed Consolidated Financial Statements reflect the financial results of the operations of Spoken beginning on March 9, 2018. Spoken’s revenue and operating loss included in the Company’s results for the nine months ended June 30, 2019, was $8 million and $21 million, respectively. The Company has finalized its purchase accounting for the Spoken acquisition.

Business Combinations

Business Combinations and Strategic Investments

Business Combinations

On March 9, 2018 (the "Acquisition Date"), the Company acquired Intellisist, Inc. ("Spoken"), a United States-based private technology company, which provides cloud-based Contact Center as a Service solutions and customer experience management and automation applications. The total purchase price was $172 million, consisting of $157 million in cash, $14 million in contingent consideration and a $1 million settlement of Spoken’s net payable to the Company which mainly related to services provided by the Company to Spoken under a co-development partnership prior to the acquisition.

Upon the achievement of three specified performance targets ("Earn-outs"), the Company is required to pay up to $16 million of contingent consideration to Spoken's former owners and employees and up to $4 million in discretionary earn-out bonuses ("Earn-out Bonuses") to Spoken employees who have contributed to the achievement of the Earn-outs. The fair value of the Earn-outs at the Acquisition Date was $14 million, which was calculated using a probability-weighted discounted cash flow model and is remeasured to fair value at each subsequent reporting period. The Earn-out Bonuses, which are intended to incentivize continuing employees to assist in achieving the Earn-outs, are excluded from the acquisition consideration and are recognized as compensation expense in the Company's Condensed Consolidated Financial Statements ratably over the estimated Earn-out periods. During the nine months ended June 30, 2019, the Company paid $11 million and $2 million for Earn-outs and Earn-out Bonuses, respectively, related to the achievement of two of the three Earn-out targets. The third Earn-out target was completed during the three months ended June 30, 2019 and the corresponding Earn-out and Earn-out Bonuses are expected to be paid by the Company during the remainder of fiscal 2019. As of June 30, 2019, the fair value of the Earn-out liability was $5 million.

In connection with this acquisition, the Company recorded goodwill of $117 million, which was assigned to the Products & Solutions segment, identifiable intangible assets with a fair value of $64 million, and other net liabilities of $9 million. The goodwill recognized is attributable primarily to the potential that the Spoken technology, cloud platform and assembled workforce will accelerate the Company's growth in cloud-based solutions. The Company determined that the goodwill is not deductible for tax purposes.

The acquired intangible assets of $64 million included technology and patents of $56 million with a weighted average useful life of 4.9 years, $5 million of in-process research and development ("IPR&D") activities, which are considered indefinite lived until projects are completed or abandoned, and customer relationships of $3 million with a weighted average useful life of 7.5 years. During the nine months ended June 30, 2019, $3 million of the acquired IPR&D activities have been completed and are being amortized over a weighted average useful life of 5.0 years and $2 million were abandoned and written off (see Note 5).

Spoken became a wholly-owned subsidiary of the Company on March 9, 2018. The Company's Condensed Consolidated Financial Statements reflect the financial results of the operations of Spoken beginning on March 9, 2018. Spoken’s revenue and operating loss included in the Company’s results for the nine months ended June 30, 2019, was $8 million and $21 million, respectively. The Company has finalized its purchase accounting for the Spoken acquisition.

Strategic Investments

On May 20, 2019, the Company made a $10 million investment in a unified communications as a service (“UCaaS”) provider delivering public sector Federal Risk and Authorization Management Program ("FedRAMP") security requirements (the “Strategic Investment”) through the acquisition of a 3-year convertible note (“Promissory Note”). The Strategic Investment offers hosted, cloud-based Voice over Internet Protocol infrastructure services and a FedRAMP authorized hosting platform. The Strategic Investment will use the proceeds from the issuance of the Promissory Note to help fund its working capital.

The Promissory Note has a principal amount of $10 million, bears interest at a rate of 8% per annum and has a maturity date of May 20, 2022. Under the terms of the Promissory Note, the Company may, at its sole discretion, convert its interest in the Promissory Note into newly issued Class D units of the Strategic Investment representing no less than 27.3% of the Strategic Investment's fully diluted capitalization at the time of the conversion. On or after the Promissory Note’s maturity date, the Company shall have the option, at its sole discretion, to demand payment from the Strategic Investment for the unpaid principal and accrued interest on the Promissory Note. In conjunction with the Promissory Note, the Company entered into a separate agreement with the Strategic Investment and its equity holders which provides the Company with an option to purchase from such equity holders any or all of the outstanding LLC units of the Strategic Investment for prices specified in the relevant agreement. The option is exercisable upon the earlier of December 31, 2021 or the Strategic Investment reaching specified milestones. The option does not currently convey power to the Company as it is not currently exercisable and requires significant economic outlay.

The Promissory Note is classified as an available-for-sale security as of June 30, 2019 with a carrying value and fair value of $10 million and is recorded within Other Assets in the Condensed Consolidated Balance Sheets. Although the Company maintains a variable interest in the Strategic Investment, it is not the primary beneficiary as it does not direct the activities that most significantly impact the economic performance of the Strategic Investment through the rights maintained with the Promissory Note or separate agreement. As of June 30, 2019, the Company's maximum exposure to loss as a result of its involvement with the Strategic Investment is limited to the initial investment in the Promissory Note of $10 million.

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Supplementary Financial Information

9 Months Ended

Jun. 30, 2019

Supplementary Financial Information [Abstract]

Supplementary Financial Information

Supplementary Financial Information

Condensed Consolidated Statements of Operations Information

The following table presents a summary of Other income (expense), net for the periods indicated:

	Successor											Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
OTHER INCOME (EXPENSE), NET
Interest income	$	4		$	1	$	11		$	2		$	2
Foreign currency (losses) gains, net	(1		)	25		(8		)	24			—
Income from transition services agreement, net	—			1		—			5			3
Other pension and post-retirement benefit credits (costs), net	1			4		5			9			(8		)
Change in fair value of emergence date warrants	7			6		28			(9		)	—
Other, net	1			—		(1		)	1			1
Total other income (expense), net	$	12		$	37	$	35		$	32		$	(2	)

A summary of Reorganization items, net for the periods indicated is presented in the following table:

	Predecessor
(In millions)	Period from October 1, 2017 through December 15, 2017
REORGANIZATION ITEMS, NET
Net gain on settlement of Liabilities subject to compromise	$	1,778
Net gain on fresh start adjustments	1,697
Bankruptcy-related professional fees	(56		)
Other items, net	(3		)
Reorganization items, net	$	3,416
Cash payments for reorganization items	$	2,524

Costs directly attributable to the implementation of the Plan of Reorganization were reported as Reorganization items, net. The cash payments for reorganization items for the period from October 1, 2017 through December 15, 2017 (Predecessor) included $2,468 million of claims paid related to Liabilities subject to compromise and $56 million for bankruptcy-related professional fees, including emergence and success fees paid on the Emergence Date.

Supplemental Cash Flow Information

	Successor										Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018		Period from October 1, 2017 through December 15, 2017
OTHER PAYMENTS
Interest payments	$	61		$	52	$	160		$	99	$	15
Income tax payments	13			8		48			17		7
NON-CASH INVESTING ACTIVITIES
(Decrease) increase in Accounts payable for Capital expenditures	$	(6	)	$	5	$	(1	)	$	5	$	—

The following table presents a reconciliation of cash, cash equivalents, and restricted cash that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows for the periods presented:

	Successor						Predecessor
(In millions)	June 30, 2019		September 30, 2018		June 30, 2018		December 15, 2017		September 30, 2017
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	729	$	700	$	685	$	366	$	876
Restricted cash included in other current assets	—		—		10		65		85
Restricted cash included in other assets	5		4		4		4		5
Total cash, cash equivalents, and restricted cash	$	734	$	704	$	699	$	435	$	966

As of June 30, 2018 (Successor), restricted cash in other current assets consisted primarily of funds held related to the sale of the Company's Networking business in July 2017. As of December 15, 2017 (Predecessor), restricted cash in other current assets consisted primarily of funds held for bankruptcy-related professional fees. As of September 30, 2017 (Predecessor), restricted cash in other current assets consisted primarily of cash that was drawn from term loans under the Debtor-in-Possession credit agreement to cash collateralize existing letters of credit.

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Business Restructuring Reserves and Programs

9 Months Ended

Jun. 30, 2019

Restructuring Reserve [Abstract]

Business Restructuring Reserves and Programs

Business Restructuring Reserves and Programs

For the three months ended June 30, 2019 and 2018 (Successor), the Company recognized restructuring charges of $1 million and $30 million, respectively. For the nine months ended June 30, 2019 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor), the Company recognized restructuring charges of $12 million, $80 million and $14 million, respectively. The restructuring charges include changes in estimates for increases and decreases in costs or changes in the timing of payments related to the restructuring programs of prior fiscal years. The Company's restructuring charges generally include separation charges which include, but are not limited to, termination payments, pension fund payments, and health care and unemployment insurance costs to be paid to, or on behalf of, the affected employees; and lease obligation charges. As the Company continues to evaluate opportunities to streamline its operations, it may identify cost savings globally and take additional restructuring actions in the future and the costs of those actions could be material. The Company does not allocate restructuring reserves to its operating segments.

Fiscal 2019 Restructuring Program

Recognized restructuring charges for the fiscal 2019 restructuring program included employee separation costs associated with employee severance actions primarily in the U.S., Europe, Middle East and Africa ("EMEA") and Canada, for which the related payments are expected to be completed by fiscal 2021.

The following table summarizes the components of the fiscal 2019 restructuring program for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations		Total
Restructuring charges	$	10		$	2	$	12
Cash payments	(5		)	—		(5		)
Impact of foreign currency fluctuations	(1		)	—		(1		)
Accrual balance as of June 30, 2019	$	4		$	2	$	6

Fiscal 2018 Restructuring Program

Fiscal 2018 restructuring obligations include employee separation costs associated with employee severance actions primarily in EMEA, for which the related payments are expected to be completed by fiscal 2026.

The following table summarizes the components of the fiscal 2018 restructuring program for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations		Total
Accrual balance as of September 30, 2018	$	54		$	—	$	54
Adjustments (1)	(1		)	—		(1		)
Cash payments	(15		)	—		(15		)
Impact of foreign currency fluctuations	(1		)	—		(1		)
Accrual balance as of June 30, 2019	$	37		$	—	$	37

⁽¹⁾  Includes changes in estimates for increases and decreases in costs related to the fiscal 2018 restructuring program, which are recorded in Restructuring charges, net in the Consolidated Statements of Operations in the period of the adjustment.

Fiscal 2008 through 2017 Restructuring Programs

These obligations are primarily for costs associated with eliminating employee positions and exiting facilities. The payments related to the headcount reductions identified in these programs are expected to be substantially completed by fiscal 2026. Future rental payments, net of estimated sublease income, related to operating lease obligations for unused space in connection with the closing or consolidation of facilities are expected to continue through fiscal 2021.

The following table aggregates the remaining components of the fiscal 2008 through 2017 restructuring programs for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations			Total
Accrual balance as of September 30, 2018	$	38		$	6		$	44
Adjustments (1)	1			—			1
Cash payments	(12		)	(2		)	(14		)
Impact of foreign currency fluctuations	(1		)	—			(1		)
Accrual balance as of June 30, 2019	$	26		$	4		$	30

⁽¹⁾  Includes changes in estimates for increases and decreases in costs related to the fiscal 2008 through 2017 restructuring programs, which are recorded in Restructuring charges, net in the Consolidated Statements of Operations in the period of the adjustment.

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Financing Arrangements

9 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Financing Arrangements

Financing Arrangements

The following table reflects principal amounts of debt and debt net of discounts and issuance costs for the periods presented:

	June 30, 2019					September 30, 2018
(In millions)	Principal amount		Net of discounts and issuance costs			Principal amount		Net of discounts and issuance costs
Term Loan Credit Agreement due December 15, 2024	$	2,881	$	2,852		$	2,903	$	2,870
Convertible 2.25% senior notes due June 15, 2023	350		268			350		256
Total debt	$	3,231	3,120			$	3,253	3,126
Debt maturing within one year			(29		)			(29		)
Long-term debt, net of current portion			$	3,091				$	3,097

Term Loan and ABL Credit Agreements

On December 15, 2017, Avaya Inc. entered into (i) the Term Loan Credit Agreement among Avaya Inc., as borrower, Avaya Holdings, the lending institutions from time to time party thereto, and Goldman Sachs Bank USA, as administrative agent and collateral agent, which provided a $2,925 million term loan facility maturing on December 15, 2024 (the "Term Loan Credit Agreement") and (ii) the ABL Credit Agreement maturing on December 15, 2022, among Avaya Inc., as borrower, Avaya Holdings, the several other borrowers party thereto, the several lenders from time to time party thereto, and Citibank, N.A., as administrative agent and collateral agent, which provided a revolving credit facility consisting of a U.S. tranche and a foreign tranche allowing for borrowings of up to an aggregate principal amount of $300 million from time to time, subject to borrowing base availability (the "ABL Credit Agreement" and, together with the Term Loan Credit Agreement, the "Credit Agreements"). On June 18, 2018, the Company amended the Term Loan Credit Agreement to reduce interest rates and to reduce the London Inter-bank Offered Rate ("LIBOR") floor that existed under the original agreement from 1.00% to 0.00%.

For the three months ended June 30, 2019 and 2018, the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018, the Company recognized interest expense of $51 million, $50 million, $151 million and $106 million, respectively, related to the Term Loan Credit Agreement, including the amortization of discounts and issuance costs.

Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At June 30, 2019, the Company had issued and outstanding letters of credit and guarantees of $45 million under the ABL Credit Agreement. As of June 30, 2019, the Company had no borrowings outstanding under the ABL. The aggregate additional principal amount that may be borrowed under the ABL Credit Agreement, based on the borrowing base less $45 million of outstanding letters of credit and guarantees, was $139 million at June 30, 2019. For the nine months ended June 30, 2019, the Company recognized interest expense of $1 million related to the ABL Credit Agreement resulting from the unused commitment fee. For the three months ended June 30, 2019, the three months ended June 30, 2018, and the period from December 16, 2017 through June 30, 2018, interest expense recognized related to the ABL Credit Agreement was not material.

Convertible Notes

On June 11, 2018, the Company issued its 2.25% Convertible Notes in an aggregate principal amount of $350 million (including the underwriters’ exercise in full of an over-allotment option of $50 million), which mature on June 15, 2023 (the "Convertible Notes"). The Convertible Notes were issued under an indenture, by and between the Company and the Bank of New York Mellon Trust Company N.A., as Trustee. For the three and nine months endedJune 30, 2019, the Company recognized interest expense of $6 million and $18 million related to the Convertible Notes, which includes $4 million and $12 million of amortization of the underwriting discount and issuance costs, respectively. For the three months ended June 30, 2018 and the period from December 16, 2017 through June 30, 2018, the Company recognized interest expense of $1 million related to the Convertible Notes, which mainly consisted of amortization of the underwriting discount.

The net carrying amount of the Convertible Notes for the periods indicated was as follows:

(In millions)	June 30, 2019			September 30, 2018
Principal	$	350		$	350
Less:
Unamortized debt discount	(76		)	(87		)
Unamortized issuance costs	(6		)	(7		)
Net carrying amount	$	268		$	256

The weighted average contractual interest rate of the Company’s outstanding debt as of June 30, 2019 and September 30, 2018 was 6.5% and 6.4%, respectively. The effective interest rate for the Term Loan Credit Agreement as of June 30, 2019 was not materially different than its contractual interest rate including adjustments related to hedging. The effective interest rate for the Convertible Notes as of June 30, 2019 was 9.2% reflecting the separation of the conversion feature in equity. The effective interest rates include interest on the debt and amortization of discounts and issuance costs.

For the period from October 1, 2017 through December 15, 2017 (Predecessor), contractual interest expense of $94 million was not recorded as interest expense, as it was not an allowed claim under the Bankruptcy Filing.

As of June 30, 2019, the Company was not in default under any of its debt agreements.

Capital Lease Obligations

Included in Other liabilities is $20 million and $31 million of capital lease obligations, net of imputed interest as of June 30, 2019 and September 30, 2018, respectively.

The Company outsources certain delivery services associated with its Enterprise Cloud and Managed Services, which include the sale of specified assets owned by the Company that are leased-back by the Company and accounted for as a capital lease. As of June 30, 2019 and September 30, 2018, capital lease obligations associated with this agreement were $16 million and $26 million, respectively.

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Derivative Instruments and Hedging Activities

9 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, "Derivatives and Hedging," ("ASC 815") and does not enter into derivatives for trading or speculative purposes.

Interest Rate Contracts

The Company, from time-to-time, enters into interest rate swap contracts as a hedge against changes in interest rates on its variable rate loans outstanding.

On May 16, 2018, the Company entered into interest rate swap agreements with six counterparties, which fixed a portion of the variable interest due under its Term Loan Credit Agreement (the "Swap Agreements"). Under the terms of the Swap Agreements, which mature on December 15, 2022, the Company pays a fixed rate of 2.935% and receives a variable rate of interest based on one-month LIBOR. As of June 30, 2019, the total notional amount of the six Swap Agreements was $1,800 million.

The Swap Agreements are designated as cash flow hedges as they are deemed highly effective as defined under ASC 815. As a result, the unrealized gains or losses on these contracts are initially recorded in Accumulated other comprehensive (loss) income in the Condensed Consolidated Balance Sheets. As interest expense is recognized on the Term Loan Credit Agreement, the corresponding deferred gain or loss on the Swap Agreements is reclassified from Accumulated other comprehensive (loss) income to Interest expense in the Condensed Consolidated Statements of Operations. Based on the amount in Accumulated other comprehensive (loss) income at June 30, 2019, approximately $20 million would be reclassified into net income in the next twelve months as interest expense.

It is management's intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives.

Foreign Currency Forward Contracts

The Company, from time-to-time, utilizes foreign currency forward contracts primarily to hedge fluctuations associated with certain monetary assets and liabilities including receivables, payables and certain intercompany obligations. These foreign currency forward contracts are not designated for hedge accounting treatment. As a result, changes in the fair value of these contracts are recorded as a component of Other income (expense), net to offset the change in the value of the hedged assets and liabilities. As of June 30, 2019, the Company maintained open foreign currency forward contracts with a total notional value of $355 million, hedging the British Pound Sterling, Indian Rupee, Czech Koruna, Australian Dollar and Mexican Peso. The Company did not maintain any foreign currency forward contracts as of June 30, 2018.

Emergence Date Warrants

In accordance with the Plan of Reorganization, the Company issued warrants to purchase 5,645,200 shares of Company common stock to the holders of the Predecessor second lien obligations pursuant to a warrant agreement ("Emergence Date Warrants"). Each Emergence Date Warrant has an exercise price of $25.55 per share and expires December 15, 2022. The Emergence Date Warrants contain certain derivative features that require them to be classified as a liability and for changes in the fair value of the liability to be recognized in earnings each reporting period. On November 14, 2018, the Company's Board of Directors approved a warrant repurchase program, authorizing the Company to repurchase up to $15 million worth of the Emergence Date Warrants. None of the Emergence Date Warrants have been exercised or repurchased as of June 30, 2019.

The fair value of the Emergence Date Warrants was determined using a probability weighted Black-Scholes option pricing model. This model requires certain input assumptions including risk-free interest rates, volatility, expected life and dividend rates. Selection of these inputs involves significant judgment. The fair value of the Emergence Date Warrants as of June 30, 2019 and September 30, 2018 was determined using the input assumptions summarized below:

	June 30, 2019		September 30, 2018
Expected volatility	57.56	%	50.14	%
Risk-free interest rates	1.71	%	2.90	%
Contractual remaining life (in years)	3.46		4.21
Price per share of common stock	$11.91		$22.14

In determining the fair value of the Emergence Date Warrants, the dividend yield was assumed to be zero as the Company does not anticipate paying dividends.

The following table summarizes the fair value of the Company's derivatives on a gross basis segregated between those that are designated as hedging instruments and those that are not designated as hedging instruments:

		June 30, 2019				September 30, 2018
(In millions)	Balance Sheet Caption	Asset		Liability		Asset		Liability
Derivatives Designated as Hedging Instruments:
Interest rate contracts	Other assets	$	—	$	—	$	3	$	—
Interest rate contracts	Other current liabilities	—		19		—		7
Interest rate contracts	Other liabilities	—		56		—		—
		—		75		3		7
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	Other current assets	2		—		—		—
Emergence Date Warrants	Other liabilities	—		6		—		34
		2		6		—		34
Total derivative fair value		$	2	$	81	$	3	$	41

The following tables provide information regarding the location and amount of pre-tax losses for derivatives designated as cash flow hedges:

	Three months ended June 30, 2019						Three months ended June 30, 2018
(In millions)	Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(59	)	$	(38	)	$	(56	)	$	(16	)
Impact of cash flow hedging relationships:
Loss recognized in AOCI - on interest rate swaps	—			(31		)	—			(17		)
Interest expense from AOCI reclassified	(2		)	2			(2		)	2

	Successor												Predecessor
	Nine months ended June 30, 2019						Period from December 16, 2017 through June 30, 2018						Period from October 1, 2017 through December 15, 2017
(In millions)	Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(177	)	$	(50	)	$	(112	)	$	(41	)	$	(14	)	$	658
Impact of cash flow hedging relationships:
Loss recognized in AOCI - on interest rate swaps	—			(78		)	—			(17		)	$	—		$	—
Interest expense from AOCI reclassified	(7		)	7			(2		)	2			$	—		$	—

The following table provides information regarding the pre-tax gains (losses) for derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations:

		Successor											Predecessor
		Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
(In millions)	Location of Derivative Pre-tax Gain (Loss)
Emergence Date Warrants	Other income (expense), net	$	7		$	6	$	28		$	(9	)	$	—
Foreign exchange contracts	Other income (expense), net	(1		)	—		(1		)	—			—

The Company records its derivatives on a gross basis in the Condensed Consolidated Balance Sheets. The Company has master netting agreements with several of its financial institution counterparties. The following table provides information on the Company's derivative positions as if those subject to master netting arrangements were presented on a net basis, allowing for the right to offset by counterparty per the master netting agreements:

	June 30, 2019						September 30, 2018
(In millions)	Asset			Liability			Asset			Liability
Gross amounts recognized in the Condensed Consolidated Balance Sheet	$	2		$	81		$	3		$	41
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheet	(2		)	(2		)	(3		)	(3		)
Net amounts	$	—		$	79		$	—		$	38

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Intangible Assets

9 Months Ended

Jun. 30, 2019

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

5. Goodwill, net and Intangible Assets, net

Goodwill, net

The changes in the carrying amount of goodwill by segment during fiscal 2019 were as follows:

(In millions)	Products & Solutions			Services			Total
Balance as of September 30, 2018	$	1,283		$	1,481		$	2,764
Impairment charges	(657		)	—			(657		)
Other	—			(2		)	(2		)
Balance as of June 30, 2019	$	626		$	1,479		$	2,105

Goodwill is not amortized but is subject to periodic testing for impairment in accordance with GAAP at the reporting unit level, which is one level below the Company’s operating segments. The Company has five reporting units, all of which are subject to impairment testing annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company's goodwill was primarily recorded upon emergence from bankruptcy as a result of applying fresh start accounting.

The Company concluded that triggering events occurred for all of its reporting units as of June 30, 2019 due to a sustained decrease in the Company’s stock price and lower than planned financial results which led to revisions to the Company's long-term forecast during the third quarter of fiscal 2019. As a result, the Company performed an interim quantitative goodwill impairment test as of June 30, 2019 to compare the fair values of its reporting units to their respective carrying amounts, including the goodwill allocated to each reporting unit.

The Company estimated the fair value of each reporting unit using a weighting of fair values derived from an income and a market approach. Under the income approach, the fair value of a reporting unit is based on the future cash flows expected from that reporting unit. Future cash flows are based on forward-looking information regarding revenue and costs for each reporting unit and are discounted using an appropriate discount rate in a discounted cash flows model. The discounted cash flows model relies on assumptions regarding revenue growth rates, gross profit, projected working capital needs, selling, general and administrative expenses, research and development expenses, business restructuring costs, capital expenditures, income tax rates, discount rates and terminal growth rates. The discount rates the Company used represent the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return an outside investor would expect to earn. To estimate cash flows beyond the final year of its model, the Company used a terminal value approach. Under this approach, the Company applied a perpetuity growth assumption to determine the terminal value. The Company incorporated the present value of the resulting terminal value into its estimate of fair value. Forecasted cash flows for each reporting unit consider current economic conditions and trends, estimated future operating results, the Company’s view of growth rates and anticipated future economic conditions. Revenue growth rates inherent in this forecast are based on input from internal and external market intelligence research sources that compare factors such as growth in global economies, regional trends in the telecommunications industry and product evolution from a technological segment basis. Macroeconomic factors such as changes in economies, product evolutions, industry consolidations and other changes beyond the Company’s control could have a positive or negative impact on achieving its targets.

The market approach estimates the fair value of a reporting unit by applying multiples of operating performance measures to the reporting unit's operating performance (the "Guideline Public Company Method"). These multiples were derived from comparable publicly-traded companies with similar investment characteristics to the reporting unit. The key estimates and assumptions that were used to determine the fair value under this market approach include current and forward 12-month operating performance results, as applicable, and the selection of the relevant multiples that were applied.

The results of the Company’s interim goodwill impairment test as of June 30, 2019 indicated that the estimated fair values of the Company’s Unified Communications (“UC”), Global Support Services (“GSS”), Avaya Professional Services (“APS”) and Enterprise Cloud and Managed Solutions (“ECMS”) reporting units were greater than their carrying amounts, however, the carrying amount of the Company’s Contact Center ("CC") reporting unit within the Products & Solutions segment exceeded its estimated fair value primarily due to a reduction in the Company's long-term forecast. As a result, the Company recorded a goodwill impairment charge of $657 million, representing the amount by which the carrying amount of the CC reporting unit exceeded its fair value. As of June 30, 2019, the remaining carrying amount of goodwill for the CC reporting unit was $197 million.

As of June 30, 2019, the fair value of the UC, APS and ECMS reporting units exceeded their carrying amounts by more than 10%, however, the GSS reporting unit had an excess fair value over its carrying value of 7%. The goodwill assigned to GSS is $1,446 million. An increase in the GSS discount rate of 65 basis points or a decrease in the GSS long-term growth rate of 95 basis points used in the interim goodwill impairment test as of June 30, 2019 would result in an estimated fair value below its carrying value.

To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional impairment charges in the future.

Intangible Assets, net

The Company's intangible assets consist of the following for the periods indicated:

(In millions)	Technology and Patents			Customer Relationships and Other Intangibles			Trademarks and Trade Names			Total
Balance as of June 30, 2019
Finite-lived intangible assets:
Cost	$	961		$	2,156		$	42		$	3,159
Accumulated amortization	(265		)	(240		)	(9		)	(514		)
Finite-lived intangible assets, net	696			1,916			33			2,645
Indefinite-lived intangible assets:
Cost	2			—			333			335
Accumulated impairment	(2		)	—			—			(2		)
Indefinite-lived intangible assets, net	—			—			333			333
Intangible assets, net	$	696		$	1,916		$	366		$	2,978
Balance as of September 30, 2018
Finite-lived intangible assets:
Cost	$	959		$	2,157		$	43		$	3,159
Accumulated amortization	(135		)	(124		)	(3		)	(262		)
Finite-lived intangible assets, net	824			2,033			40			2,897
Indefinite-lived intangible assets	5			—			332			337
Intangible assets, net	$	829		$	2,033		$	372		$	3,234

Intangible assets include technology and patents, customer relationships, and trademarks and trade names. Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets. Intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment annually and more frequently if events occur or circumstances change that indicate an asset may be impaired.

During the three months ended June 30, 2019, the Company elected to abandon an in-process research and development project acquired with Spoken (see Note 4) since it no longer aligned with the Company’s technology roadmap. As a result, the Company recorded an impairment charge of $2 million to write down the full carrying amount.

As a result of the goodwill triggering events described above, the Company performed a recoverability test on all of its finite-lived asset groups as of June 30, 2019 before proceeding to the goodwill impairment review and concluded that no impairment charge was necessary. The recoverability test of finite-lived assets was based on forecasts of undiscounted cash flows for each asset group. The Company also performed an interim quantitative impairment test for its indefinite-lived intangible asset, the Avaya Trade Name, as of June 30, 2019. The Avaya Trade Name was evaluated for impairment using the relief-from-royalty method. Under this methodology, the fair value of the trade name was determined by applying a royalty rate to forecasted net revenues and discounted using a risk-adjusted rate of capital. Revenue growth rates inherent in the forecast were based on input from internal and external market intelligence research sources that compare factors such as growth in global economies, regional trends in the telecommunications industry and product evolution from a technological segment basis. The royalty rate was determined using a set of observed market royalty rates. The result of the impairment test as of June 30, 2019 indicated that the estimated fair value of the trade name exceeded its carrying amount by more than 10% and no impairment existed.

To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record additional impairment charges in the future.

The total goodwill and intangible asset impairment charges described above of $659 million are presented in the Impairment charges line item in the Condensed Consolidated Statement of Operations.

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Fair Value Measurements

9 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Pursuant to the accounting guidance for fair value measurements, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The accounting guidance for fair value measurements also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into three levels that may be used to measure fair value:

Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable.

Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and September 30, 2018 were as follows:

	June 30, 2019								September 30, 2018
	Fair Value Measurements Using								Fair Value Measurements Using
(In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Strategic investments	$	10	$	—	$	—	$	10	$	—	$	—	$	—	$	—
Other investments	—		—		—		—		2		2		—		—
Interest rate contracts	—		—		—		—		3		—		3		—
Foreign exchange contracts	2		—		2		—		—		—		—		—
Total assets	$	12	$	—	$	2	$	10	$	5	$	2	$	3	$	—
Liabilities:
Interest rate contracts	$	75	$	—	$	75	$	—	$	7	$	—	$	7	$	—
Spoken acquisition Earn-outs	5		—		—		5		15		—		—		15
Emergence Date Warrants	6		—		—		6		34		—		—		34
Total liabilities	$	86	$	—	$	75	$	11	$	56	$	—	$	7	$	49

Strategic investments

The Strategic Investment is valued using a discounted cash flow model which includes various unobservable inputs including cash flow projections, long-term growth rates, discount rates, and market comparable companies. The Strategic Investment is recorded in Other assets in the Condensed Consolidated Balance Sheets.

Other investments

Other investments classified as Level 1 assets are priced using quoted market prices for identical assets in active markets that are observable. Other investments are recorded in Other assets in the Condensed Consolidated Balance Sheets.

Interest rate and foreign exchange contracts

Interest rate and foreign exchange contracts classified as Level 2 assets and liabilities are not actively traded and are valued using pricing models that use observable inputs.

Spoken acquisition Earn-outs

The Spoken acquisition Earn-outs classified as Level 3 liabilities are measured using a probability-weighted discounted cash flow model. Significant unobservable inputs, which included probability of the achievement of the earn out targets and discount rate assumption, reflected the assumptions market participants would use in valuing these liabilities.

Emergence Date Warrants

Emergence Date Warrants classified as Level 3 liabilities are priced using the Black-Scholes option pricing model.

During the three months ended June 30, 2019 and 2018 (Successor), the nine months ended June 30, 2019 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor) and the period from October 1, 2017 through December 15, 2017 (Predecessor), there were no transfers between Level 1 and Level 2, or into and out of Level 3.

The following table summarizes the activity for the Company's Level 3 liabilities measured at fair value on a recurring basis:

(In millions)	Emergence Date Warrants			Spoken Acquisition Earn-outs			Strategic Investments		Total
Balance as of September 30, 2018	$	34		$	15		$	—	$	49
Strategic investments	—			—			10		10
Change in fair value(1)	(28		)	1			—		(27		)
Settlement	—			(11		)	—		(11		)
Balance as of June 30, 2019	$	6		$	5		$	10	$	21

⁽¹⁾ Changes in fair value of the Emergence Date Warrants are included in Other income (expense), net. Changes in fair value of the Spoken acquisition Earn-outs are included in Selling, general and administrative expense.

Fair Value of Financial Instruments

The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, to the extent the underlying liability will be settled in cash, approximate their carrying values because of the short-term nature of these instruments.

As of June 30, 2019 and September 30, 2018, the estimated fair value of the Convertible Notes was determined based on the quoted price of the Convertible Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2.

The estimated fair values of amounts borrowed under the Company's other financing arrangements at June 30, 2019 and September 30, 2018 were estimated based on a Level 2 input based on a market approach utilizing market-clearing data on the valuation date in addition to bid/ask prices.

The estimated fair values of the amounts borrowed under the Company’s financing agreements at June 30, 2019 and September 30, 2018 are as follows:

	June 30, 2019				September 30, 2018
(In millions)	Principal amount		Fair value		Principal amount		Fair value
Term Loan Credit Agreement due December 15, 2024	$	2,881	$	2,764	$	2,903	$	2,932
Convertible 2.25% senior notes due June 15, 2023	350		305		350		357
Total debt	$	3,231	$	3,069	$	3,253	$	3,289

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Income Taxes

9 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent

21.00%

Income Taxes

Income Taxes

The Company's effective income tax rate for the three and nine months endedJune 30, 2019 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Tax Cuts and Jobs Act ("the Act"), (7) the goodwill impairment charges recorded in the third quarter of fiscal 2019, (8) current period elections taken in submitted tax filings, and (9) foreign tax credits.

The Company's effective income tax rate for the three months ended June 30, 2018 differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) the impact of the Act, and (7) foreign tax credits.

The Company's effective income tax rate for the period from December 16, 2017 through June 30, 2018 (Successor) differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local income taxes, (6) an increase in estimated current year tax loss, which is eliminated as part of the attribute reduction related to the cancellation of indebtedness income ("CODI"), and (7) the impact of the Act.

The Company's effective income tax rate for the period from October 1, 2017 through December 15, 2017 (Predecessor) differed from the U.S. federal tax rate primarily due to: (1) income and losses taxed at different foreign tax rates, (2) losses generated within certain foreign jurisdictions for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized, (3) non-U.S. withholding taxes on foreign earnings, (4) current period changes to unrecognized tax positions, (5) U.S. state and local taxes, and (6) the impact of reorganization and fresh start adjustments.

During fiscal 2018, the Company centralized the management and ownership of certain intellectual property in a U.S. limited partnership, some of which was previously managed and owned by a Bermuda tax resident corporation. This action resulted in the utilization and recognition of previously unrecognized NOLs, the reversal of deferred tax liabilities established as part of fresh start accounting and the recognition of a deferred tax asset, cumulatively in the amount of $366 million.

The Company's U.S. federal net operating loss ("NOL") and tax credits have been eliminated due to the recognition of CODI in fiscal 2018.

On December 22, 2017, the Act was signed into law. The Act lowered the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. The Company has a September 30th tax year-end and therefore many of the tax law changes became effective in the first quarter of fiscal 2019. The Company has made a policy decision to treat Global Intangible Low-Taxed Income (“GILTI”) as a period cost. The Company benefits from the deduction attributable to Foreign Derived Intangible Income (“FDII”) and has taxable income attributable to GILTI, both of which impact the effective tax rate. During the three months ended December 31, 2018, Avaya completed its analysis of the impact of the Act as required by Staff Accounting Bulletin No. 118 issued by the SEC on December 22, 2017.

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Benefit Obligations

9 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Benefit Obligations

Benefit Obligations

The Company sponsors non-contributory defined benefit pension plans covering a portion of its U.S. employees and retirees, and post-retirement benefit plans covering a portion of its U.S. employees and retirees that include healthcare benefits and life insurance coverage. Certain non-U.S. operations have various retirement benefit programs covering substantially all of their employees. Some of these programs are considered to be defined benefit pension plans for accounting purposes.

The components of the pension and post-retirement net periodic benefit (credit) cost for the periods indicated are provided in the table below:

	Successor												Predecessor(1)
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
Pension Benefits - U.S.
Components of net periodic benefit (credit) cost
Service cost	$	1		$	1		$	3		$	2		$	1
Interest cost	10			9			29			19			22
Expected return on plan assets	(15		)	(17		)	(45		)	(35		)	(38		)
Amortization of actuarial loss	—			—			—			—			20
Net periodic benefit (credit) cost	$	(4	)	$	(7	)	$	(13	)	$	(14	)	$	5
Pension Benefits - Non-U.S.
Components of net periodic benefit cost
Service cost	$	2		$	1		$	5		$	3		$	2
Interest cost	2			3			7			5			3
Expected return on plan assets	—			—			—			—			(1		)
Amortization of actuarial loss	—			—			—			—			2
Net periodic benefit cost	$	4		$	4		$	12		$	8		$	6
Post-retirement Benefits - U.S.
Components of net periodic benefit cost
Service cost	$	—		$	1		$	1		$	1		$	—
Interest cost	4			4			11			7			3
Expected return on plan assets	(2		)	(3		)	(7		)	(5		)	(2		)
Amortization of prior service cost	—			—			—			—			(3		)
Amortization of actuarial loss	(1		)	—			(1		)	—			2
Net periodic benefit cost	$	1		$	2		$	4		$	3		$	—

⁽¹⁾ Excludes Plan of Reorganization related settlements that were recorded in Reorganization items, net in the Condensed Consolidated Statements of Operations.

The service components of net periodic benefit (credit) cost were recorded similar to compensation expense, while all other components were recorded in Other income (expense), net.

The Company's general funding policy with respect to its U.S. qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations, or to directly pay benefits where appropriate. Contributions to U.S. pension plans were $22 million for the nine months ended June 30, 2019, which represented the amounts required to satisfy the minimum statutory funding requirements in the U.S. For the remainder of fiscal 2019, the Company estimates that it will make contributions totaling $5 million to satisfy the minimum statutory funding requirements in the U.S.

Contributions to the non-U.S. pension plans were $19 million for the nine months ended June 30, 2019. For the remainder of fiscal 2019, the Company estimates that it will make contributions totaling $6 million for its non-U.S. plans.

In June 2019, the Company announced a change in medical benefits under the post-retirement medical plan for represented retirees as of April 30, 2019 and their eligible dependents. Effective January 1, 2020 the post-retirement medical plan coverage provided through the Company’s group plan will be replaced with medical coverage provided through the private and public insurance marketplace for the identified retirees. As a result, the U.S. represented retiree post-retirement plan was remeasured as of June 30, 2019, which resulted in the recognition of an $8 million increase to the accumulated benefit obligation with an offset to Accumulated other comprehensive (loss) income within the Condensed Consolidated Balance Sheets. The increase was mainly driven by changes in actuarial assumptions, partially offset by the impact of the change in medical coverage.

Most post-retirement medical benefits are not pre-funded. Consequently, the Company makes payments directly to the claims administrator as retiree medical benefit claims are disbursed. These payments are funded by the Company up to the maximum contribution amounts specified in the plan documents and contract with the Communications Workers of America and the International Brotherhood of Electrical Workers, and contributions from the participants, if required. During the nine months ended June 30, 2019, the Company made payments for retiree medical and dental benefits of $11 million and received a $3 million reimbursement from the represented employees' post-retirement health trust related to payments in prior periods. The Company estimates it will make contributions for retiree medical and dental benefits totaling $3 million for the remainder of fiscal 2019.

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Share-based Compensation

9 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation

Share-based Compensation

Successor

The Company has a share-based compensation plan under which non-employee directors, employees of the Company or any of its affiliates, and certain consultants and advisors may be granted stock options, restricted stock, restricted stock units ("RSUs"), performance awards ("PRSUs") and other forms of awards granted or denominated in shares of the Company's common stock, as well as certain cash-based awards. Stock options and RSUs granted to employees generally vest ratably over a period of three years. PRSUs granted to certain senior executive employees vest at the end of the service period of three years. Awards granted to non-employee directors during fiscal 2019 vest immediately, while those granted during fiscal 2018 vested ratably over one year. As of the Emergence Date, forfeitures are accounted for as incurred.

Pre-tax share-based compensation expense for the three months ended June 30, 2019 and 2018 was $8 million and $7 million, respectively. Pre-tax share-based compensation expense for the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018 was $19 million and $13 million, respectively.

During the nine months ended June 30, 2019, the Company granted 1,686,004 RSUs with a weighted average grant date fair value of $15.46 per RSU. During the nine months ended June 30, 2019, there were 1,484,659 RSUs that vested with a weighted average grant date fair value of $15.49.

In February 2019, the Company granted 274,223 PRSUs with a grant date fair value of $11.18 per PRSU. These PRSUs will become eligible to vest if, prior to the vesting date of February 11, 2022, the average closing price of one share of the Company’s Common Stock for sixty consecutive days equals or exceeds $23.50. The grant date fair value of the award was estimated using a Monte Carlo simulation model that incorporated multiple valuation assumptions, including the probability of achieving the specified market condition. Additional assumptions used in the valuation included an expected volatility of 53.76% based on a blend of Company and peer group company historical data adjusted for the Company’s leverage, and a risk-free interest rate of 2.45% based on U.S. Treasury yields with a term equal to the vesting period. The grant date fair value of these PRSUs will be recognized as expense ratably over the vesting period and will not be adjusted in future periods for the success or failure to achieve the specified market condition.

In February 2019, the Company also granted 182,020 PRSUs which will vest based on the attainment of specified performance metrics for each of the next three separate fiscal years (collectively the "Performance Period"), and the Company's total shareholder return over the Performance Period as compared to the total shareholder return for a specified index of companies over the same period. The grant date fair value of the awards was estimated using a Monte Carlo simulation model that incorporated multiple valuation assumptions, including the probability of achieving the total shareholder return market condition. Other key assumptions used in the valuation included an expected volatility of 53.00% based on a blend of Company and peer group company historical data adjusted for the Company’s leverage, and a risk free interest rate of 2.46% based on U.S. Treasury yields with a term equal to the remaining Performance Period as of the grant date. During the Performance Period, the Company will adjust compensation expense for the awards based on its best estimate of attainment of the specified annual performance metrics. The cumulative effect on current and prior periods of a change in the estimated number of PRSUs that are expected to be earned during the Performance Period will be recognized as an adjustment to earnings in the period of the revision.

Predecessor

Prior to the Emergence Date, the Predecessor Company had granted share-based awards that were canceled upon emergence from bankruptcy. In conjunction with the cancellation, the Predecessor Company accelerated the unrecognized share-based compensation expense and recorded $3 million of compensation expense in the period from October 1, 2017 through December 15, 2017, principally reflected in Reorganization costs, net.

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Capital Stock

9 Months Ended

Jun. 30, 2019

Equity [Abstract]

Capital Stock

Capital Stock

Preferred Stock

The Company's certificate of incorporation authorizes it to issue up to 55,000,000 shares of preferred stock with a par value of $0.01 per share. As of June 30, 2019 and September 30, 2018, there were no preferred shares issued or outstanding.

Common Stock

The Company's certificate of incorporation authorizes it to issue up to 550,000,000 shares of common stock with a par value of $0.01 per share. As of June 30, 2019, there were 110,887,967 shares issued and 110,875,287 shares outstanding with the remaining 12,680 shares distributable in accordance with the Plan of Reorganization. As of September 30, 2018, there were 110,218,653 shares issued and 110,012,790 shares outstanding with the remaining 205,863 shares distributable in accordance with the Plan of Reorganization.

On November 14, 2018, the Company's Board of Directors approved a warrant repurchase program, authorizing the Company to repurchase Emergence Date Warrants for an aggregate expenditure of up to $15 million. The repurchases may be made from time to time in the open market, through block trades or in privately negotiated transactions. The Company may adopt one or more purchase plans pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in order to implement the warrant repurchase program. The warrant repurchase program does not obligate the Company to purchase any warrants and may be terminated, increased or decreased by the Board of Directors in its discretion at any time. As of June 30, 2019, there were no warrant repurchases under the program.

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Net Income (Loss) Per Common Share

9 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Net Income (Loss) Per Common Share

Per Common Share

Basic (loss) earnings per share is calculated by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share reflects the potential dilution that would occur if equity awards granted under the Company's various share-based compensation plans were vested or exercised; if the Company's Convertible Notes or the warrants the Company sold to purchase up to 12.6 million shares of its common stock in connection with the issuance of the Convertible Notes ("Call Spread Warrants") were exercised; and/or if the Emergence Date Warrants were exercised, resulting in the issuance of common shares that would participate in the earnings of the Company.

The following table sets forth the calculation of net (loss) income attributable to common shareholders and the computation of basic and diluted (loss) earnings per share for the periods indicated:

	Successor												Predecessor
(In millions, except per share amounts)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
(Loss) earnings per share:
Numerator
Net (loss) income	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977
Dividends and accretion to preferred stockholders	—			—			—			—			(6		)
Undistributed (loss) income	(633		)	(88		)	(637		)	19			2,971
Percentage allocated to common stockholders(1)	100.0		%	100.0		%	100.0		%	100.0		%	86.9		%
Numerator for basic and diluted (loss) earnings per common share	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,582
Denominator
Denominator for basic (loss) earnings per weighted average common shares	111.0			109.8			110.7			109.8			497.3
Effect of dilutive securities
Restricted stock units	—			—			—			1.2			—
Denominator for diluted (loss) earnings per weighted average common shares	111.0			109.8			110.7			111.0			497.3
(Loss) earnings per common share
Basic	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
Diluted	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
(1) Basic weighted average common stock outstanding	111.0			109.8			110.7			109.8			497.3
Basic weighted average common stock and common stock equivalents (preferred shares)	111.0			109.8			110.7			109.8			572.4
Percentage allocated to common stockholders	100.0		%	100.0		%	100.0		%	100.0		%	86.9		%

For the three and nine months endedJune 30, 2019, the Company excluded 1.0 million stock options, 3.6 million RSUs and 5.6 million Emergence Date Warrants from the diluted loss per share calculation as their effect would have been anti-dilutive. The Company also excluded 0.5 million PRSUs from the diluted loss per share calculation as their performance metrics have not yet been attained. The Company’s Convertible Notes and Call Spread Warrants were also excluded for the three and nine months endedJune 30, 2019 as discussed in more detail below. For the three months ended June 30, 2018, the Company excluded 1.1 million stock options, 3.3 million restricted stock units and 5.6 million Emergence Date Warrants from the diluted loss per share calculation as their effect would have been anti-dilutive. For the period from December 16, 2017 through June 30, 2018, the Company excluded 1.1 million stock options and 5.6 million Emergence Date Warrants from the diluted earnings per share calculation as their effect would have been anti-dilutive.

For purposes of considering the Convertible Notes in determining diluted (loss) earnings per share, the Company has the ability and current intent to settle conversions of the Convertible Notes through combination settlement by repaying the principal portion in cash and any excess of the conversion value over the principal amount (the "Conversion Premium") in shares of the Company's common stock. Therefore, only the impact of the Conversion Premium will be included in diluted weighted average shares outstanding using the treasury stock method. Since the Convertible Notes were out of the money and anti-dilutive as of June 30, 2019 and 2018, they were excluded from the diluted loss per share calculation for the three months ended June 30, 2019 and 2018, the nine months ended June 30, 2019 and the period from December 16, 2017 through June 30, 2018. The Call Spread Warrants will not be considered in calculating diluted weighted average shares outstanding until the price per share of the Company’s common stock exceeds the strike price of $37.3625 per share. When the price per share of the Company’s common stock exceeds the strike price per share of the Call Spread Warrants, the effect of the additional shares that may be issued upon exercise of the Call Spread Warrants will be included in diluted weighted average shares outstanding using the treasury stock method.

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Operating Segments

9 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Operating Segments

Segments

The Products & Solutions segment primarily develops, markets, and sells unified communications and contact center solutions, offered on premises, in the cloud, or as a hybrid solution. These integrate multiple forms of communications, including telephony, email, instant messaging and video. The Services segment develops, markets and sells comprehensive end-to-end global service offerings that enable customers to evaluate, plan, design, implement, monitor, manage and optimize complex enterprise communications networks.

The Company’s chief operating decision maker makes financial decisions and allocates resources based on segment profit information obtained from the Company’s internal management systems. Management does not include in its segment measures of profitability selling, general and administrative expenses, research and development expenses, amortization of intangible assets, and certain discrete items, such as fair value adjustments recognized upon emergence from bankruptcy, charges relating to restructuring actions, impairment charges, and merger-related costs as these costs are not core to the measurement of segment performance, but rather are controlled at the corporate level.

Summarized financial information relating to the Company's operating segments is shown in the following table for the periods indicated:

	Successor												Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
REVENUE
Products & Solutions	$	298		$	322		$	913		$	716		$	253
Services	422			433			1,269			967			351
Unallocated Amounts (1)	(3		)	(63		)	(18		)	(171		)	—
	$	717		$	692		$	2,164		$	1,512		$	604
GROSS PROFIT
Products & Solutions	$	189		$	210		$	587		$	473		$	169
Services	249			257			759			582			196
Unallocated Amounts (2)	(48		)	(115		)	(163		)	(302		)	(3		)
	390			352			1,183			753			362
OPERATING EXPENSES
Selling, general and administrative	253			281			761			613			264
Research and development	49			51			154			110			38
Amortization of intangible assets	41			39			122			86			10
Impairment charges	659			—			659			—			—
Restructuring charges, net	1			30			12			80			14
	1,003			401			1,708			889			326
OPERATING (LOSS) INCOME	(613		)	(49		)	(525		)	(136		)	36
INTEREST EXPENSE, OTHER INCOME (EXPENSE), NET AND REORGANIZATION ITEMS, NET	(47		)	(19		)	(142		)	(80		)	3,400
(LOSS) INCOME BEFORE INCOME TAXES	$	(660	)	$	(68	)	$	(667	)	$	(216	)	$	3,436

⁽¹⁾ Unallocated amounts in Revenue represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

⁽²⁾   Unallocated amounts in Gross Profit include the fair value adjustments recognized upon emergence from bankruptcy and excluded from segment gross profit; the effect of the amortization of technology intangibles; and costs that are not core to the measurement of segment management’s performance, but rather are controlled at the corporate level.

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Accumulated Other Comprehensive (Loss) Income

9 Months Ended

Jun. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive (Loss) Income

The components of Accumulated other comprehensive (loss) income for the periods indicated were as follows:

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Income (Loss)
Balance as of March 31, 2019 (Successor)	$	51		$	(12	)	$	(33	)	$	—	$	6
Other comprehensive loss before reclassifications	(8		)	(10		)	(31		)	—		(49		)
Amounts reclassified to earnings	—			—			2			—		2
Benefit from income taxes	2			—			7			—		9
Balance as of June 30, 2019 (Successor)	$	45		$	(22	)	$	(55	)	$	—	$	(32	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Income (Loss)
Balance as of September 30, 2018 (Successor)	$	51		$	(31	)	$	(2	)	$	—	$	18
Other comprehensive (loss) income before reclassifications	(8		)	9			(78		)	—		(77		)
Amounts reclassified to earnings	—			—			7			—		7
Benefit from income taxes	2			—			18			—		20
Balance as of June 30, 2019 (Successor)	$	45		$	(22	)	$	(55	)	$	—	$	(32	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items		Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Loss
Balance as of March 31, 2018 (Successor)	$	—	$	(25	)	$	—		$	—	$	(25	)
Other comprehensive loss before reclassifications	—		(4		)	(17		)	—		(21		)
Amounts reclassified to earnings	—		—			2			—		2
Benefit from income taxes	—		—			3			—		3
Balance as of June 30, 2018 (Successor)	$	—	$	(29	)	$	(12	)	$	—	$	(41	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other			Accumulated Other Comprehensive (Loss) Income
Balance as of September 30, 2017 (Predecessor)	$	(1,375	)	$	(72	)	$	—		$	(1	)	$	(1,448	)
Other comprehensive (loss) income before reclassifications	(24		)	3			—			—			(21		)
Amounts reclassified to earnings	16			—			—			—			16
Pension settlement	721			—			—			—			721
Provision for income taxes	(58		)	—			—			—			(58		)
Balance as of December 15, 2017 (Predecessor)	(720		)	(69		)	—			(1		)	(790		)
Elimination of Predecessor Company Accumulated other comprehensive loss	720			69			—			1			790
Balance as of December 15, 2017 (Predecessor)	$	—		$	—		$	—		$	—		$	—
Balance as of December 16, 2017 (Successor)	$	—		$	—		$	—		$	—		$	—
Other comprehensive loss before reclassifications	—			(29		)	(17		)	—			(46		)
Amounts reclassified to earnings	—			—			2			—			2
Benefit from income taxes	—			—			3			—			3
Balance as of June 30, 2018 (Successor)	$	—		$	(29	)	$	(12	)	$	—		$	(41	)

The amounts reclassified out of Accumulated other comprehensive (loss) income for the unamortized pension, post-retirement and postemployment benefit-related items are recorded in Other income (expense), net in the Condensed Consolidated Statement of Operations. The amounts reclassified out of Accumulated other comprehensive (loss) income for the interest rate swaps are recorded in Interest expense in the Condensed Consolidated Statement of Operations.

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Related Party Transactions

9 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company's Board of Directors is comprised of seven directors, including the Company's Chief Executive Officer and six non-employee directors. On March 18, 2019, Jacqueline E. Yeaney joined the Company's Board of Directors, filling the previous vacancy on the Company's Board of Directors caused by the resignation of Ronald A. Rittenmeyer effective as of April 30, 2018.

Specific Arrangements Involving the Successor Company’s Current Directors and Executive Officers

William D. Watkins is a Director and Chair of the Board of Directors of Avaya Holdings and serves on the board of directors of Flex Ltd., an electronics design manufacturer. For the nine months ended June 30, 2019 (Successor), the period from December 16, 2017 through June 30, 2018 (Successor), and the period from October 1, 2017 through December 15, 2017 (Predecessor), the Company purchased goods and services from subsidiaries of Flex Ltd. of $22 million, $13 million, and $6 million, respectively. As of June 30, 2019 (Successor) and September 30, 2018 (Successor), the Company had outstanding accounts payable due to Flex Ltd. of $18 million and $4 million, respectively.

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

General

The Company records accruals for legal contingencies to the extent that it has concluded that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters specifically described below because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the proceeding is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties (including where it is uncertain how liability, if any, will be shared among multiple defendants); or (vii) there is a wide range of potential outcomes.

In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations and proceedings, including, but not limited to, those identified below, relating to intellectual property, commercial, employment, environmental and regulatory matters.

Based on the Company's experience, management believes that the damages amounts claimed in a case are not a meaningful indicator of the potential liability. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of cases. The Company believes that it has meritorious defenses in connection with its current lawsuits and material claims and disputes.

In the opinion of the Company's management based upon information currently available to the Company, while the outcome of these lawsuits, claims and disputes is uncertain, the likely results of these lawsuits, claims and disputes are not expected, either individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations or cash flows, although the effect could be material to the Company's consolidated results of operations or consolidated cash flows for any interim reporting period.

During the three months ended June 30, 2019 and 2018 (Successor), the nine months ended June 30, 2019 (Successor), and the period from December 16, 2017 through June 30, 2018 (Successor), there were no costs incurred in connection with the resolution of legal matters other than those incurred in the ordinary course of business. During the period from October 1, 2017 through December 15, 2017 (Predecessor), costs incurred in connection with the resolution of certain legal matters was $37 million.

Intellectual Property and Commercial Disputes

In January 2010, SAE Power Incorporated and SAE Power Company (collectively, "SAE") filed a complaint in the New Jersey Superior Court asserting various claims including breach of contract, unjust enrichment, promissory estoppel and breach of the covenant of good faith and fair dealing arising out of Avaya’s relationship with SAE as a supplier of various power supply products. SAE has since asserted additional claims against Avaya for fraud, negligent misrepresentation, misappropriation of trade secrets and civil conspiracy. SAE sought to recover for alleged losses stemming from Avaya’s termination of its power supply purchases from SAE, including for Avaya’s alleged disclosure of SAE’s alleged trade secret and/or confidential information to another power supply vendor. On July 19, 2016, the Court entered an order granting Avaya’s motion for partial summary judgment, dismissing certain of SAE’s claims regarding the alleged disclosure of trade secrets. In January 2017, the Company filed a Notice of Suggestion of Pendency of Bankruptcy, which informed the Court of the Company’s voluntary bankruptcy petition filing and stay of proceedings. SAE filed a proof of claim in the Bankruptcy Court. On September 28, 2017, the Company filed a motion in the Bankruptcy Court seeking to estimate SAE’s claim, and the estimation hearing took place on February 15, 2018. On June 12, 2018, the Bankruptcy Court entered an Order estimating SAE’s pre-petition misappropriation claim in the amount of $1.21 million plus interest, its fraud claim at $0 million and declined to estimate SAE’s breach of contract claim, leaving it to be resolved through the bankruptcy claims allowance process. Once the stay of proceedings is lifted, SAE may pursue its liability claims against Avaya in the New Jersey state court action, subject to the estimation Order of the Bankruptcy Court. On June 22, 2018, SAE filed a Notice of Appeal challenging the estimation Order, which was denied by the United States District Court on May 6, 2019. In July 2019, the Company and SAE reached a settlement of the dispute. SAE will receive an allowed unsecured claim and distribution in accordance with the general unsecured claims procedure in the Company's Plan of Reorganization, and Avaya will be dismissed from the state court action.

In the ordinary course of business, the Company is involved in litigation alleging it has infringed upon third parties’ intellectual property rights, including patents and copyrights; some litigation may involve claims for infringement against customers, distributors and resellers by third parties relating to the use of Avaya’s products, as to which the Company may provide indemnifications of varying scope to certain parties. The Company is also involved in litigation pertaining to general commercial disputes with customers, suppliers, vendors and other third parties including royalty disputes. These matters are ongoing and the outcomes are subject to inherent uncertainties. As a result, the Company cannot be assured that any such matter will not have a material adverse effect on its financial position, results of operations or cash flows.

Product Warranties

The Company recognizes a liability for the estimated costs that may be incurred to remedy certain deficiencies of quality or performance of the Company’s products. These product warranties extend over a specified period of time, generally ranging up to two years from the date of sale depending upon the product subject to the warranty. The Company accrues a provision for estimated future warranty costs based upon the historical relationship of warranty claims to sales. The Company periodically reviews the adequacy of its product warranties and adjusts, if necessary, the warranty percentage and accrued warranty reserve, which is included in other current and non-current liabilities in the Condensed Consolidated Balance Sheets, for actual experience. As of June 30, 2019 and September 30, 2018, the amount reserved was $1 million and $2 million, respectively.

Guarantees of Indebtedness and Other Off-Balance Sheet Arrangements

Letters of Credit and Guarantees

The Company provides guarantees, letters of credit and surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company's performance in accordance with contractual or legal obligations. As of June 30, 2019, the maximum potential payment obligation with regards to letters of credit, guarantees and surety bonds was $70 million. The outstanding letters of credit are collateralized by restricted cash of $4 million included in Other assets on the Condensed Consolidated Balance Sheets as of June 30, 2019.

Purchase Commitments and Termination Fees

The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, to manage manufacturing lead times and to help assure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that allow them to produce and procure inventory based upon forecasted requirements provided by the Company. If the Company does not meet these specified purchase commitments, it could be required to purchase the inventory, or in the case of certain agreements, pay an early termination fee. Historically, the Company has not been required to pay a charge for not meeting its designated purchase commitments with these suppliers, but has been obligated to purchase certain excess inventory levels from its outsourced manufacturers due to actual sales of product varying from forecast and due to transition of manufacturing from one vendor to another.

The Company’s outsourcing agreements with its most significant contract manufacturers automatically renew in July and September for successive periods of twelve months each, subject to specific termination rights for the Company and the contract manufacturers. All manufacturing of the Company’s products is performed in accordance with either detailed requirements or specifications and product designs furnished by the Company, and is subject to rigorous quality control standards.

Transactions with Nokia

Pursuant to the Contribution and Distribution Agreement effective October 1, 2000 (the "Contribution and Distribution Agreement"), Lucent Technologies, Inc. (now Nokia) contributed to the Company substantially all of the assets, liabilities and operations associated with its enterprise networking businesses (the "Company’s Businesses") and distributed the Company’s stock pro-rata to the shareholders of Lucent ("distribution"). The Contribution and Distribution Agreement, among other things, provides that, in general, the Company will indemnify Nokia for all liabilities including certain pre-distribution tax obligations of Nokia relating to the Company’s Businesses and all contingent liabilities primarily relating to the Company’s Businesses or otherwise assigned to the Company. In addition, the Contribution and Distribution Agreement provides that certain contingent liabilities not allocated to one of the parties will be shared by Nokia and the Company in prescribed percentages. The Contribution and Distribution Agreement also provides that each party will share specified portions of contingent liabilities based upon agreed percentages related to the business of the other party that exceed $50 million. The Company is unable to determine the maximum potential amount of other future payments, if any, that it could be required to make under this agreement.

In addition, in connection with the distribution, the Company and Lucent entered into a Tax Sharing Agreement effective October 1, 2000 (the "Tax Sharing Agreement") that governs Nokia’s and the Company’s respective rights, responsibilities and obligations after the distribution with respect to taxes for the periods ending on or before the distribution. Generally, pre-distribution taxes or benefits that are clearly attributable to the business of one party will be borne solely by that party and other pre-distribution taxes or benefits will be shared by the parties based on a formula set forth in the Tax Sharing Agreement. The Company may be subject to additional taxes or benefits pursuant to the Tax Sharing Agreement related to future settlements of audits by state and local and foreign taxing authorities for the periods prior to the Company’s separation from Nokia.

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Revenue Recognition (Tables)

9 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Impact of Adoption

The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Balance Sheet as of June 30, 2019 is as follows:

	June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606
ASSETS
Inventory	$	71		$	33		$	104
Contract assets	178			(178		)	—
Contract costs	128			(128		)	—
Other current assets	149			100			249
Property, plant and equipment, net	243			1			244
Deferred income taxes, net	25			2			27
Other assets	109			(10		)	99
LIABILITIES
Accounts payable	292			(1		)	291
Contract liabilities	470			48			518
Other current liabilities	130			4			134
Deferred income taxes, net	120			(29		)	91
Other liabilities	390			2			392
STOCKHOLDERS' EQUITY
Retained earnings	(255		)	(204		)	(459		)

The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Balance Sheet as of June 30, 2019 is as follows:

	June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606
ASSETS
Inventory	$	71		$	33		$	104
Contract assets	178			(178		)	—
Contract costs	128			(128		)	—
Other current assets	149			100			249
Property, plant and equipment, net	243			1			244
Deferred income taxes, net	25			2			27
Other assets	109			(10		)	99
LIABILITIES
Accounts payable	292			(1		)	291
Contract liabilities	470			48			518
Other current liabilities	130			4			134
Deferred income taxes, net	120			(29		)	91
Other liabilities	390			2			392
STOCKHOLDERS' EQUITY
Retained earnings	(255		)	(204		)	(459		)

The impact of the adoption of ASC 606 by financial statement line item within the Condensed Consolidated Statements of Operations for the three and nine months endedJune 30, 2019 is as follows:

	Three months ended June 30, 2019									Nine months ended June 30, 2019
(In millions)	As Reported			Adjustments			Without Adoption of ASC 606			As Reported			Adjustments			Without Adoption of ASC 606
REVENUE
Products	$	297		$	(26	)	$	271		$	908		$	(71	)	$	837
Services	420			(19		)	401			1,256			(60		)	1,196
	717			(45		)	672			2,164			(131		)	2,033
COSTS
Products:
Costs	109			(4		)	105			329			(13		)	316
Amortization of technology intangible assets	43			—			43			130			—			130
Services	175			(7		)	168			522			(20		)	502
	327			(11		)	316			981			(33		)	948
GROSS PROFIT	390			(34		)	356			1,183			(98		)	1,085
OPERATING EXPENSES
Selling, general and administrative	253			(1		)	252			761			3			764
Research and development	49			—			49			154			—			154
Amortization of intangible assets	41			—			41			122			—			122
Impairment charges	659			—			659			659			—			659
Restructuring charges, net	1			—			1			12			—			12
	1,003			(1		)	1,002			1,708			3			1,711
OPERATING LOSS	(613		)	(33		)	(646		)	(525		)	(101		)	(626		)
Interest expense	(59		)	—			(59		)	(177		)	—			(177		)
Other income, net	12			—			12			35			—			35
LOSS BEFORE INCOME TAXES	(660		)	(33		)	(693		)	(667		)	(101		)	(768		)
Benefit from (provision for) income taxes	27			(37		)	(10		)	30			(8		)	22
NET LOSS	$	(633	)	$	(70	)	$	(703	)	$	(637	)	$	(109	)	$	(746	)

Disaggregation of Revenue

Disaggregation of Revenue

The following tables provide the Company's disaggregated revenue for the three and nine months endedJune 30, 2019:

(In millions)	Three months ended June 30, 2019			Nine months ended June 30, 2019
REVENUE
Products & Solutions	$	298		$	913
Services	422			1,269
Unallocated Amounts	(3		)	(18		)
	$	717		$	2,164

	Three months ended June 30, 2019
(In millions)	Products & Solutions		Services		Unallocated			Total
Revenue:
U.S.	$	149	$	245	$	(2	)	$	392
International:
Europe, Middle East and Africa	91		93		(1		)	183
Asia Pacific	38		47		—			85
Americas International - Canada and Latin America	20		37		—			57
Total International	149		177		(1		)	325
Total revenue	$	298	$	422	$	(3	)	$	717

	Nine months ended June 30, 2019
(In millions)	Products & Solutions		Services		Unallocated			Total
Revenue:
U.S.	$	429	$	744	$	(12	)	$	1,161
International:
Europe, Middle East and Africa	290		283		(3		)	570
Asia Pacific	113		131		(2		)	242
Americas International - Canada and Latin America	81		111		(1		)	191
Total International	484		525		(6		)	1,003
Total revenue	$	913	$	1,269	$	(18	)	$	2,164

Contract with Customer, Asset and Liability

The following table provides information about accounts receivable, contract assets and contract liabilities for the periods presented:

(In millions)	June 30, 2019		October 1, 2018		Increase (Decrease)
Accounts receivable, net	$	276	$	376	$	(100	)
Contract assets:
Current	$	178	$	78	$	100
Non-current (Other assets)	3		3		—
	$	181	$	81	$	100
Cost of obtaining a contract:
Current (Contract costs)	$	88	$	64	$	24
Non-current (Other assets)	44		36		8
	$	132	$	100	$	32
Cost to fulfill a contract:
Current (Contract costs)	$	40	$	45	$	(5	)
Contract liabilities:
Current	$	470	$	467	$	3
Non-current (Other liabilities)	76		52		24
	$	546	$	519	$	27

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Goodwill (Tables)

9 Months Ended

Jun. 30, 2019

Goodwill [Line Items]

Schedule of Goodwill

The changes in the carrying amount of goodwill by segment during fiscal 2019 were as follows:

(In millions)	Products & Solutions			Services			Total
Balance as of September 30, 2018	$	1,283		$	1,481		$	2,764
Impairment charges	(657		)	—			(657		)
Other	—			(2		)	(2		)
Balance as of June 30, 2019	$	626		$	1,479		$	2,105

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Supplementary Financial Information (Tables)

9 Months Ended

Jun. 30, 2019

Supplementary Financial Information [Abstract]

Consolidated Statements of Operations Information

The following table presents a summary of Other income (expense), net for the periods indicated:

	Successor											Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
OTHER INCOME (EXPENSE), NET
Interest income	$	4		$	1	$	11		$	2		$	2
Foreign currency (losses) gains, net	(1		)	25		(8		)	24			—
Income from transition services agreement, net	—			1		—			5			3
Other pension and post-retirement benefit credits (costs), net	1			4		5			9			(8		)
Change in fair value of emergence date warrants	7			6		28			(9		)	—
Other, net	1			—		(1		)	1			1
Total other income (expense), net	$	12		$	37	$	35		$	32		$	(2	)

Summary of Reorganization Items

A summary of Reorganization items, net for the periods indicated is presented in the following table:

	Predecessor
(In millions)	Period from October 1, 2017 through December 15, 2017
REORGANIZATION ITEMS, NET
Net gain on settlement of Liabilities subject to compromise	$	1,778
Net gain on fresh start adjustments	1,697
Bankruptcy-related professional fees	(56		)
Other items, net	(3		)
Reorganization items, net	$	3,416
Cash payments for reorganization items	$	2,524

Supplemental Cash Flow Information

	Successor						Predecessor
(In millions)	June 30, 2019		September 30, 2018		June 30, 2018		December 15, 2017		September 30, 2017
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	729	$	700	$	685	$	366	$	876
Restricted cash included in other current assets	—		—		10		65		85
Restricted cash included in other assets	5		4		4		4		5
Total cash, cash equivalents, and restricted cash	$	734	$	704	$	699	$	435	$	966

As of June 30, 2018 (Successor), restricted cash in other current assets consisted primarily of funds held related to the sale of the Company's Networking business in July 2017. As of December 15, 2017 (Predecessor), restricted cash in other current assets consisted primarily of funds held for bankruptcy-related professional fees. As of September 30, 2017 (Predecessor), restricted cash in other current assets consisted primarily of cash that was drawn from term loans under the Debtor-in-Possession credit agreement to cash collateralize existing letters of credit.

	Successor										Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018		Period from October 1, 2017 through December 15, 2017
OTHER PAYMENTS
Interest payments	$	61		$	52	$	160		$	99	$	15
Income tax payments	13			8		48			17		7
NON-CASH INVESTING ACTIVITIES
(Decrease) increase in Accounts payable for Capital expenditures	$	(6	)	$	5	$	(1	)	$	5	$	—

The following table presents a reconciliation of cash, cash equivalents, and restricted cash that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows for the periods presented:

	Successor						Predecessor
(In millions)	June 30, 2019		September 30, 2018		June 30, 2018		December 15, 2017		September 30, 2017
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	729	$	700	$	685	$	366	$	876
Restricted cash included in other current assets	—		—		10		65		85
Restricted cash included in other assets	5		4		4		4		5
Total cash, cash equivalents, and restricted cash	$	734	$	704	$	699	$	435	$	966

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Business Restructuring Reserves and Programs (Tables)

9 Months Ended

Jun. 30, 2019

Restructuring Reserve [Abstract]

Schedule of Restructuring and Related Costs

The following table summarizes the components of the fiscal 2019 restructuring program for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations		Total
Restructuring charges	$	10		$	2	$	12
Cash payments	(5		)	—		(5		)
Impact of foreign currency fluctuations	(1		)	—		(1		)
Accrual balance as of June 30, 2019	$	4		$	2	$	6

The following table aggregates the remaining components of the fiscal 2008 through 2017 restructuring programs for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations			Total
Accrual balance as of September 30, 2018	$	38		$	6		$	44
Adjustments (1)	1			—			1
Cash payments	(12		)	(2		)	(14		)
Impact of foreign currency fluctuations	(1		)	—			(1		)
Accrual balance as of June 30, 2019	$	26		$	4		$	30

The following table summarizes the components of the fiscal 2018 restructuring program for the nine months ended June 30, 2019:

(In millions)	Employee Separation Costs			Lease Obligations		Total
Accrual balance as of September 30, 2018	$	54		$	—	$	54
Adjustments (1)	(1		)	—		(1		)
Cash payments	(15		)	—		(15		)
Impact of foreign currency fluctuations	(1		)	—		(1		)
Accrual balance as of June 30, 2019	$	37		$	—	$	37

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Financing Arrangements (Tables)

9 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The following table reflects principal amounts of debt and debt net of discounts and issuance costs for the periods presented:

	June 30, 2019					September 30, 2018
(In millions)	Principal amount		Net of discounts and issuance costs			Principal amount		Net of discounts and issuance costs
Term Loan Credit Agreement due December 15, 2024	$	2,881	$	2,852		$	2,903	$	2,870
Convertible 2.25% senior notes due June 15, 2023	350		268			350		256
Total debt	$	3,231	3,120			$	3,253	3,126
Debt maturing within one year			(29		)			(29		)
Long-term debt, net of current portion			$	3,091				$	3,097

Convertible Debt

The net carrying amount of the Convertible Notes for the periods indicated was as follows:

(In millions)	June 30, 2019			September 30, 2018
Principal	$	350		$	350
Less:
Unamortized debt discount	(76		)	(87		)
Unamortized issuance costs	(6		)	(7		)
Net carrying amount	$	268		$	256

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Assumptions Used

The fair value of the Emergence Date Warrants as of June 30, 2019 and September 30, 2018 was determined using the input assumptions summarized below:

	June 30, 2019		September 30, 2018
Expected volatility	57.56	%	50.14	%
Risk-free interest rates	1.71	%	2.90	%
Contractual remaining life (in years)	3.46		4.21
Price per share of common stock	$11.91		$22.14

Schedule of Derivative Instruments in Balance Sheet

The following table summarizes the fair value of the Company's derivatives on a gross basis segregated between those that are designated as hedging instruments and those that are not designated as hedging instruments:

		June 30, 2019				September 30, 2018
(In millions)	Balance Sheet Caption	Asset		Liability		Asset		Liability
Derivatives Designated as Hedging Instruments:
Interest rate contracts	Other assets	$	—	$	—	$	3	$	—
Interest rate contracts	Other current liabilities	—		19		—		7
Interest rate contracts	Other liabilities	—		56		—		—
		—		75		3		7
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	Other current assets	2		—		—		—
Emergence Date Warrants	Other liabilities	—		6		—		34
		2		6		—		34
Total derivative fair value		$	2	$	81	$	3	$	41

Derivatives Designated as Cash Flow Hedges

The following tables provide information regarding the location and amount of pre-tax losses for derivatives designated as cash flow hedges:

	Three months ended June 30, 2019						Three months ended June 30, 2018
(In millions)	Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(59	)	$	(38	)	$	(56	)	$	(16	)
Impact of cash flow hedging relationships:
Loss recognized in AOCI - on interest rate swaps	—			(31		)	—			(17		)
Interest expense from AOCI reclassified	(2		)	2			(2		)	2

	Successor												Predecessor
	Nine months ended June 30, 2019						Period from December 16, 2017 through June 30, 2018						Period from October 1, 2017 through December 15, 2017
(In millions)	Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income			Interest Expense			Other Comprehensive (Loss) Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(177	)	$	(50	)	$	(112	)	$	(41	)	$	(14	)	$	658
Impact of cash flow hedging relationships:
Loss recognized in AOCI - on interest rate swaps	—			(78		)	—			(17		)	$	—		$	—
Interest expense from AOCI reclassified	(7		)	7			(2		)	2			$	—		$	—

Derivatives Not Designated As Hedging Instruments

The following table provides information regarding the pre-tax gains (losses) for derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations:

		Successor											Predecessor
		Three months ended June 30, 2019			Three months ended June 30, 2018		Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
(In millions)	Location of Derivative Pre-tax Gain (Loss)
Emergence Date Warrants	Other income (expense), net	$	7		$	6	$	28		$	(9	)	$	—
Foreign exchange contracts	Other income (expense), net	(1		)	—		(1		)	—			—

Schedule of Outstanding Derivative Positions Presented on a Net Basis

The following table provides information on the Company's derivative positions as if those subject to master netting arrangements were presented on a net basis, allowing for the right to offset by counterparty per the master netting agreements:

	June 30, 2019						September 30, 2018
(In millions)	Asset			Liability			Asset			Liability
Gross amounts recognized in the Condensed Consolidated Balance Sheet	$	2		$	81		$	3		$	41
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheet	(2		)	(2		)	(3		)	(3		)
Net amounts	$	—		$	79		$	—		$	38

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Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2019

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class

The Company's intangible assets consist of the following for the periods indicated:

(In millions)	Technology and Patents			Customer Relationships and Other Intangibles			Trademarks and Trade Names			Total
Balance as of June 30, 2019
Finite-lived intangible assets:
Cost	$	961		$	2,156		$	42		$	3,159
Accumulated amortization	(265		)	(240		)	(9		)	(514		)
Finite-lived intangible assets, net	696			1,916			33			2,645
Indefinite-lived intangible assets:
Cost	2			—			333			335
Accumulated impairment	(2		)	—			—			(2		)
Indefinite-lived intangible assets, net	—			—			333			333
Intangible assets, net	$	696		$	1,916		$	366		$	2,978
Balance as of September 30, 2018
Finite-lived intangible assets:
Cost	$	959		$	2,157		$	43		$	3,159
Accumulated amortization	(135		)	(124		)	(3		)	(262		)
Finite-lived intangible assets, net	824			2,033			40			2,897
Indefinite-lived intangible assets	5			—			332			337
Intangible assets, net	$	829		$	2,033		$	372		$	3,234

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and September 30, 2018 were as follows:

	June 30, 2019								September 30, 2018
	Fair Value Measurements Using								Fair Value Measurements Using
(In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Strategic investments	$	10	$	—	$	—	$	10	$	—	$	—	$	—	$	—
Other investments	—		—		—		—		2		2		—		—
Interest rate contracts	—		—		—		—		3		—		3		—
Foreign exchange contracts	2		—		2		—		—		—		—		—
Total assets	$	12	$	—	$	2	$	10	$	5	$	2	$	3	$	—
Liabilities:
Interest rate contracts	$	75	$	—	$	75	$	—	$	7	$	—	$	7	$	—
Spoken acquisition Earn-outs	5		—		—		5		15		—		—		15
Emergence Date Warrants	6		—		—		6		34		—		—		34
Total liabilities	$	86	$	—	$	75	$	11	$	56	$	—	$	7	$	49

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table summarizes the activity for the Company's Level 3 liabilities measured at fair value on a recurring basis:

(In millions)	Emergence Date Warrants			Spoken Acquisition Earn-outs			Strategic Investments		Total
Balance as of September 30, 2018	$	34		$	15		$	—	$	49
Strategic investments	—			—			10		10
Change in fair value(1)	(28		)	1			—		(27		)
Settlement	—			(11		)	—		(11		)
Balance as of June 30, 2019	$	6		$	5		$	10	$	21

⁽¹⁾ Changes in fair value of the Emergence Date Warrants are included in Other income (expense), net.

Fair Value, by Balance Sheet Grouping

The estimated fair values of the amounts borrowed under the Company’s financing agreements at June 30, 2019 and September 30, 2018 are as follows:

	June 30, 2019				September 30, 2018
(In millions)	Principal amount		Fair value		Principal amount		Fair value
Term Loan Credit Agreement due December 15, 2024	$	2,881	$	2,764	$	2,903	$	2,932
Convertible 2.25% senior notes due June 15, 2023	350		305		350		357
Total debt	$	3,231	$	3,069	$	3,253	$	3,289

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Benefit Obligations (Tables)

9 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs

The components of the pension and post-retirement net periodic benefit (credit) cost for the periods indicated are provided in the table below:

	Successor												Predecessor(1)
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
Pension Benefits - U.S.
Components of net periodic benefit (credit) cost
Service cost	$	1		$	1		$	3		$	2		$	1
Interest cost	10			9			29			19			22
Expected return on plan assets	(15		)	(17		)	(45		)	(35		)	(38		)
Amortization of actuarial loss	—			—			—			—			20
Net periodic benefit (credit) cost	$	(4	)	$	(7	)	$	(13	)	$	(14	)	$	5
Pension Benefits - Non-U.S.
Components of net periodic benefit cost
Service cost	$	2		$	1		$	5		$	3		$	2
Interest cost	2			3			7			5			3
Expected return on plan assets	—			—			—			—			(1		)
Amortization of actuarial loss	—			—			—			—			2
Net periodic benefit cost	$	4		$	4		$	12		$	8		$	6
Post-retirement Benefits - U.S.
Components of net periodic benefit cost
Service cost	$	—		$	1		$	1		$	1		$	—
Interest cost	4			4			11			7			3
Expected return on plan assets	(2		)	(3		)	(7		)	(5		)	(2		)
Amortization of prior service cost	—			—			—			—			(3		)
Amortization of actuarial loss	(1		)	—			(1		)	—			2
Net periodic benefit cost	$	1		$	2		$	4		$	3		$	—

⁽¹⁾ Excludes Plan of Reorganization related settlements that were recorded in Reorganization items, net in the Condensed Consolidated Statements of Operations.

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Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Share

The following table sets forth the calculation of net (loss) income attributable to common shareholders and the computation of basic and diluted (loss) earnings per share for the periods indicated:

	Successor												Predecessor
(In millions, except per share amounts)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
(Loss) earnings per share:
Numerator
Net (loss) income	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,977
Dividends and accretion to preferred stockholders	—			—			—			—			(6		)
Undistributed (loss) income	(633		)	(88		)	(637		)	19			2,971
Percentage allocated to common stockholders(1)	100.0		%	100.0		%	100.0		%	100.0		%	86.9		%
Numerator for basic and diluted (loss) earnings per common share	$	(633	)	$	(88	)	$	(637	)	$	19		$	2,582
Denominator
Denominator for basic (loss) earnings per weighted average common shares	111.0			109.8			110.7			109.8			497.3
Effect of dilutive securities
Restricted stock units	—			—			—			1.2			—
Denominator for diluted (loss) earnings per weighted average common shares	111.0			109.8			110.7			111.0			497.3
(Loss) earnings per common share
Basic	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
Diluted	$	(5.70	)	$	(0.80	)	$	(5.75	)	$	0.17		$	5.19
(1) Basic weighted average common stock outstanding	111.0			109.8			110.7			109.8			497.3
Basic weighted average common stock and common stock equivalents (preferred shares)	111.0			109.8			110.7			109.8			572.4
Percentage allocated to common stockholders	100.0		%	100.0		%	100.0		%	100.0		%	86.9		%

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Operating Segments (Tables)

9 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Summarized Financial Information of Operating Segments

Summarized financial information relating to the Company's operating segments is shown in the following table for the periods indicated:

	Successor												Predecessor
(In millions)	Three months ended June 30, 2019			Three months ended June 30, 2018			Nine months ended June 30, 2019			Period from December 16, 2017 through June 30, 2018			Period from October 1, 2017 through December 15, 2017
REVENUE
Products & Solutions	$	298		$	322		$	913		$	716		$	253
Services	422			433			1,269			967			351
Unallocated Amounts (1)	(3		)	(63		)	(18		)	(171		)	—
	$	717		$	692		$	2,164		$	1,512		$	604
GROSS PROFIT
Products & Solutions	$	189		$	210		$	587		$	473		$	169
Services	249			257			759			582			196
Unallocated Amounts (2)	(48		)	(115		)	(163		)	(302		)	(3		)
	390			352			1,183			753			362
OPERATING EXPENSES
Selling, general and administrative	253			281			761			613			264
Research and development	49			51			154			110			38
Amortization of intangible assets	41			39			122			86			10
Impairment charges	659			—			659			—			—
Restructuring charges, net	1			30			12			80			14
	1,003			401			1,708			889			326
OPERATING (LOSS) INCOME	(613		)	(49		)	(525		)	(136		)	36
INTEREST EXPENSE, OTHER INCOME (EXPENSE), NET AND REORGANIZATION ITEMS, NET	(47		)	(19		)	(142		)	(80		)	3,400
(LOSS) INCOME BEFORE INCOME TAXES	$	(660	)	$	(68	)	$	(667	)	$	(216	)	$	3,436

⁽¹⁾ Unallocated amounts in Revenue represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.

⁽²⁾   Unallocated amounts in Gross Profit include the fair value adjustments recognized upon emergence from bankruptcy and excluded from segment gross profit; the effect of the amortization of technology intangibles; and costs that are not core to the measurement of segment management’s performance, but rather are controlled at the corporate level.

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Accumulated Other Comprehensive (Loss) Income (Tables)

9 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive (loss) income for the periods indicated were as follows:

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Income (Loss)
Balance as of March 31, 2019 (Successor)	$	51		$	(12	)	$	(33	)	$	—	$	6
Other comprehensive loss before reclassifications	(8		)	(10		)	(31		)	—		(49		)
Amounts reclassified to earnings	—			—			2			—		2
Benefit from income taxes	2			—			7			—		9
Balance as of June 30, 2019 (Successor)	$	45		$	(22	)	$	(55	)	$	—	$	(32	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Income (Loss)
Balance as of September 30, 2018 (Successor)	$	51		$	(31	)	$	(2	)	$	—	$	18
Other comprehensive (loss) income before reclassifications	(8		)	9			(78		)	—		(77		)
Amounts reclassified to earnings	—			—			7			—		7
Benefit from income taxes	2			—			18			—		20
Balance as of June 30, 2019 (Successor)	$	45		$	(22	)	$	(55	)	$	—	$	(32	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items		Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other		Accumulated Other Comprehensive Loss
Balance as of March 31, 2018 (Successor)	$	—	$	(25	)	$	—		$	—	$	(25	)
Other comprehensive loss before reclassifications	—		(4		)	(17		)	—		(21		)
Amounts reclassified to earnings	—		—			2			—		2
Benefit from income taxes	—		—			3			—		3
Balance as of June 30, 2018 (Successor)	$	—	$	(29	)	$	(12	)	$	—	$	(41	)

(In millions)	Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items			Foreign Currency Translation			Unrealized Loss on Term Loan Interest Rate Swap			Other			Accumulated Other Comprehensive (Loss) Income
Balance as of September 30, 2017 (Predecessor)	$	(1,375	)	$	(72	)	$	—		$	(1	)	$	(1,448	)
Other comprehensive (loss) income before reclassifications	(24		)	3			—			—			(21		)
Amounts reclassified to earnings	16			—			—			—			16
Pension settlement	721			—			—			—			721
Provision for income taxes	(58		)	—			—			—			(58		)
Balance as of December 15, 2017 (Predecessor)	(720		)	(69		)	—			(1		)	(790		)
Elimination of Predecessor Company Accumulated other comprehensive loss	720			69			—			1			790
Balance as of December 15, 2017 (Predecessor)	$	—		$	—		$	—		$	—		$	—
Balance as of December 16, 2017 (Successor)	$	—		$	—		$	—		$	—		$	—
Other comprehensive loss before reclassifications	—			(29		)	(17		)	—			(46		)
Amounts reclassified to earnings	—			—			2			—			2
Benefit from income taxes	—			—			3			—			3
Balance as of June 30, 2018 (Successor)	$	—		$	(29	)	$	(12	)	$	—		$	(41	)

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Background and Basis of Presentation - Narrative (Details) $ in Millions	3 Months Ended				7 Months Ended	9 Months Ended
	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) segment
Quantifying Misstatement in Current Year Financial Statements, Amount						$ 4
Number of segments | segment						2
Quantifying Misstatement in Current Year Financial Statements, Amount	$ (633)	$ (13)	$ 9	$ (88)	$ 19	$ (637)
Selling, General and Administrative Expenses [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount						$ 6

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Recent Accounting Pronouncements - Narrative (Details) - USD ($) $ in Millions	2 Months Ended	7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2018	Jun. 30, 2019	Mar. 31, 2019	Oct. 01, 2018	Sep. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase of net cash used in investing activities		$ (192)	$ (95)
Accounts receivable, net			276		$ 376	$ 377
Inventory			71		57	81
Contract assets			178		78	0
Contract costs			128		109	0
Other current assets			149		104	170
Property, Plant and Equipment, Net			243		249	250
Deferred income taxes, net			25		27	29
Other assets			109		90	74
Contract liabilities			470		467	484
Goodwill			2,105			2,764
Other current liabilities			130		152	148
Deferred income taxes, net			120		169	140
Other Liabilities, Noncurrent			390		372	374
Retained Earnings (Accumulated Deficit)			(255)		382	$ 287
Accounting Standards Update 2016-18 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase of net cash used in investing activities		$ (55)
Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable, net					(1)
Inventory					(24)
Contract assets					78
Contract costs					109
Other current assets					(66)
Property, Plant and Equipment, Net					(1)
Deferred income taxes, net					(2)
Other assets					16
Contract liabilities					(17)
Other current liabilities					4
Deferred income taxes, net					29
Other Liabilities, Noncurrent					(2)
Retained Earnings (Accumulated Deficit)				$ 3
Predecessor
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase of net cash used in investing activities	$ (13)
Predecessor | Accounting Standards Update 2016-18 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase of net cash used in investing activities	$ (21)
Accumulated Deficit | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained Earnings (Accumulated Deficit)			3	$ 3	95
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Inventory			33
Contract assets			(178)
Contract costs			(128)
Other current assets			100
Property, Plant and Equipment, Net			1
Deferred income taxes, net			2
Other assets			(10)
Contract liabilities			48
Other current liabilities			4
Deferred income taxes, net			(29)
Other Liabilities, Noncurrent			2
Retained Earnings (Accumulated Deficit)			(204)
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accumulated Deficit | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained Earnings (Accumulated Deficit)					97
Previously Reported [Member] | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained Earnings (Accumulated Deficit)					92
Previously Reported [Member] | Accumulated Deficit | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained Earnings (Accumulated Deficit)					$ 92
Restatement Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract liabilities			2
Goodwill			$ 2

XML

Revenue Recognition - Impact of Adoption (Details) - USD ($) $ in Millions	3 Months Ended				7 Months Ended	9 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Oct. 01, 2018	Sep. 30, 2018
ASSETS
Accounts receivable, net	$ 276					$ 276	$ 376	$ 377
Inventory	71					71	57	81
Contract assets	178					178	78	0
Contract costs	128					128	109	0
Other current assets	149					149	104	170
Property, plant and equipment, net	243					243	249	250
Deferred income taxes, net	25					25	27	29
Other assets	109					109	90	74
Accounts Payable, Current	292					292		266
LIABILITIES
Contract liabilities	470					470	467	484
Other current liabilities	130					130	152	148
Deferred income taxes, net	120					120	169	140
Other liabilities	390					390	372	374
STOCKHOLDERS' EQUITY
Retained Earnings (Accumulated Deficit)	(255)					(255)	382	$ 287
REVENUE
Revenue	(717)			$ (692)	$ (1,512)	(2,164)
Contract with Customer, Liability, Revenue Recognized	109					505
COSTS
Cost of Revenue	327			340	759	981
GROSS PROFIT	(390)			(352)	(753)	(1,183)
OPERATING EXPENSES
Selling, general and administrative	(253)			(281)	(613)	(761)
Research and development	(49)			(51)	(110)	(154)
Amortization of intangible assets	(41)			(39)	(86)	(122)
Asset Impairment Charges	659			0	0	659
Restructuring charges, net	(1)			(30)	(80)	(12)
Total operating Expenses	(1,003)			(401)	(889)	(1,708)
Operating Income (Loss) [Abstract]
OPERATING LOSS	613			49	136	525
Interest expense	(59)			(56)	(112)	(177)
Other income (expense), net	(12)			(37)	(32)	(35)
LOSS BEFORE INCOME TAXES	(660)			(68)	(216)	(667)
(Provision for) benefit from income taxes	(27)			20	(235)	(30)
Net income (loss)	(633)	$ (13)	$ 9	(88)	19	(637)
Accounting Standards Update 2014-09
ASSETS
Accounts receivable, net							(1)
Inventory							(24)
Contract assets							78
Contract costs							109
Other current assets							(66)
Property, plant and equipment, net							(1)
Deferred income taxes, net							(2)
Other assets							16
LIABILITIES
Contract liabilities							(17)
Other current liabilities							4
Deferred income taxes, net							29
Other liabilities							$ (2)
REVENUE
Revenue	(672)					(2,033)
COSTS
Total Cost of Goods and Services	(316)					(948)
GROSS PROFIT	(356)					(1,085)
OPERATING EXPENSES
Selling, general and administrative	(252)					(764)
Research and development	(49)					(154)
Amortization of intangible assets	(41)					(122)
Asset Impairment Charges	659					659
Restructuring charges, net	(1)					(12)
Total operating Expenses	(1,002)					(1,711)
Operating Income (Loss) [Abstract]
OPERATING LOSS	646					626
Interest expense	(59)					(177)
Other income (expense), net	(12)					(35)
LOSS BEFORE INCOME TAXES	(693)					(768)
(Provision for) benefit from income taxes	10					(22)
Net income (loss)	(703)					(746)
Adjustments | Accounting Standards Update 2014-09
ASSETS
Inventory	33					33
Contract assets	(178)					(178)
Contract costs	(128)					(128)
Other current assets	100					100
Property, plant and equipment, net	1					1
Deferred income taxes, net	2					2
Other assets	(10)					(10)
Accounts Payable, Current	(1)					(1)
LIABILITIES
Contract liabilities	48					48
Other current liabilities	4					4
Deferred income taxes, net	(29)					(29)
Other liabilities	2					2
STOCKHOLDERS' EQUITY
Retained Earnings (Accumulated Deficit)	(204)					(204)
Without Adoption of ASC 606
ASSETS
Inventory	104					104
Contract assets	0					0
Contract costs	0					0
Other current assets	249					249
Property, plant and equipment, net	244					244
Deferred income taxes, net	27					27
Other assets	99					99
Accounts Payable, Current	291					291
LIABILITIES
Contract liabilities	518					518
Other current liabilities	134					134
Deferred income taxes, net	91					91
Other liabilities	392					392
STOCKHOLDERS' EQUITY
Retained Earnings (Accumulated Deficit)	(459)					(459)
Products
REVENUE
Revenue	(297)			(300)	(664)	(908)
COSTS
Total Cost of Goods and Services	(109)			(114)	(257)	(329)
Amortization of technology intangible assets	(43)			(44)	(92)	(130)
Products | Accounting Standards Update 2014-09
REVENUE
Revenue	(271)					(837)
COSTS
Total Cost of Goods and Services	(105)					(316)
Amortization of technology intangible assets	(43)					(130)
Services
REVENUE
Revenue	(420)			(392)	(848)	(1,256)
COSTS
Total Cost of Goods and Services	(175)			$ (182)	$ (410)	(522)
Services | Accounting Standards Update 2014-09
REVENUE
Revenue	(401)					(1,196)
COSTS
Total Cost of Goods and Services	(168)					(502)
Adjustments
LIABILITIES
Contract liabilities	2					2
Adjustments | Accounting Standards Update 2014-09
REVENUE
Revenue	(45)					131
COSTS
Total Cost of Goods and Services	(11)					33
GROSS PROFIT	(34)					98
OPERATING EXPENSES
Selling, general and administrative	(1)					(3)
Research and development	0					0
Amortization of intangible assets	0					0
Asset Impairment Charges	0					0
Restructuring charges, net	0					0
Total operating Expenses	(1)					(3)
Operating Income (Loss) [Abstract]
OPERATING LOSS	(33)					101
Interest expense	0					0
Other income (expense), net	0					0
LOSS BEFORE INCOME TAXES	33					(101)
(Provision for) benefit from income taxes	(37)					8
Net income (loss)	70					(109)
Adjustments | Products | Accounting Standards Update 2014-09
REVENUE
Revenue	(26)					71
COSTS
Total Cost of Goods and Services	(4)					13
Amortization of technology intangible assets	0					0
Adjustments | Services | Accounting Standards Update 2014-09
REVENUE
Revenue	(19)					60
COSTS
Total Cost of Goods and Services	$ (7)					$ 20

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Revenue Recognition - Narrative (Details) $ in Millions	3 Months Ended	9 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Disaggregation of Revenue [Line Items]
Capitalized Contract Cost to Obtain a Contract, Amortization	$ 27	$ 73
Capitalized Contract Cost to Fulfill, Amortization	11	31
Revenue recognized that was previously recorded as a contract liability	109	505
Revenue, Remaining Performance Obligation, Amount	$ 2,700	2,700
Selling, General and Administrative Expenses
Disaggregation of Revenue [Line Items]
Capitalized Contract Cost to Obtain a Contract, Amortization		70
Cost of Sales [Member]
Disaggregation of Revenue [Line Items]
Capitalized Contract Cost to Obtain a Contract, Amortization		$ 3

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		7 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Disaggregation of Revenue [Line Items]
Contract with Customer, Performance Obligation Satisfied in Previous Period				$ 5
Revenue	$ 717	$ 692	$ 1,512	2,164
U.S.
Disaggregation of Revenue [Line Items]
Revenue	392			1,161
International
Disaggregation of Revenue [Line Items]
Revenue	325			1,003
Europe, Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenue	183			570
Asia Pacific
Disaggregation of Revenue [Line Items]
Revenue	85			242
Americas International - Canada and Latin America
Disaggregation of Revenue [Line Items]
Revenue	57			191
Products & Solutions
Disaggregation of Revenue [Line Items]
Revenue	298			913
Products & Solutions | U.S.
Disaggregation of Revenue [Line Items]
Revenue	149			429
Products & Solutions | International
Disaggregation of Revenue [Line Items]
Revenue	149			484
Products & Solutions | Europe, Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenue	91			290
Products & Solutions | Asia Pacific
Disaggregation of Revenue [Line Items]
Revenue	38			113
Products & Solutions | Americas International - Canada and Latin America
Disaggregation of Revenue [Line Items]
Revenue	20			81
Services
Disaggregation of Revenue [Line Items]
Revenue	422			1,269
Services | U.S.
Disaggregation of Revenue [Line Items]
Revenue	245			744
Services | International
Disaggregation of Revenue [Line Items]
Revenue	177			525
Services | Europe, Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenue	93			283
Services | Asia Pacific
Disaggregation of Revenue [Line Items]
Revenue	47			131
Services | Americas International - Canada and Latin America
Disaggregation of Revenue [Line Items]
Revenue	37			111
Unallocated
Disaggregation of Revenue [Line Items]
Revenue	(3)	$ (63)	$ (171)	(18)
Unallocated | U.S.
Disaggregation of Revenue [Line Items]
Revenue	(2)			(12)
Unallocated | International
Disaggregation of Revenue [Line Items]
Revenue	(1)			(6)
Unallocated | Europe, Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenue	(1)			(3)
Unallocated | Asia Pacific
Disaggregation of Revenue [Line Items]
Revenue	0			(2)
Unallocated | Americas International - Canada and Latin America
Disaggregation of Revenue [Line Items]
Revenue	$ 0			$ (1)
Minimum | Professional Services, simple contracts
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P28D
Minimum | Global Support Services
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P1Y
Minimum | Professional Services, complex contracts
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P6M
Minimum | Cloud and Managed Services
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P1Y
Maximum | Professional Services, simple contracts
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P42D
Maximum | Global Support Services
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P5Y
Maximum | Professional Services, complex contracts
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P1Y
Maximum | Cloud and Managed Services
Disaggregation of Revenue [Line Items]
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment				P5Y

XML

Revenue Recognition - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions	Jun. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 2,700
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	1 year
Remaining performance obligation, amount	$ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	1 year
Remaining performance obligation, amount	$ 0

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Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	9 Months Ended
	Jun. 30, 2019	Oct. 01, 2018	Sep. 30, 2018
Accounts receivable, net
Accounts receivable, net	$ 276	$ 376	$ 377
Increase (decrease) in accounts receivable, net	(100)
Contract assets:
Contract assets, current	178	78	0
Increase (decrease) in contract assets, current	100
Contract assets, non-current	3	3
Increase (decrease) in contract assets, non-current	0
Total contract assets	181	81
Increase (decrease) in total contract assets	100
Cost of obtaining a contract:
Cost of obtaining a contract, current	88	64
Increase (decrease) in cost of obtaining a contract, current	24
Cost of obtaining a contract, non-current	44	36
Increase (decrease) in cost of obtaining a contract, non-current	8
Total cost of obtaining a contract	132	100
Increase (decrease) in total cost of obtaining a contract	32
Cost to fulfill a contract:
Cost incurred to fulfill a contract, current	40	45
Increase (decrease) in cost incurred to fulfill a contract, current	(5)
Contract liabilities:
Contract liabilities, current	470	467	$ 484
Increase (decrease) in contract liabilities, current	3
Contract liabilities, non-current	76	52
Increase (decrease) in contract liabilities, non-current	24
Total contract liabilities	546	$ 519
Increase (decrease) in total contract liabilities	$ 27

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Business Combinations (Details) - USD ($) $ in Millions		3 Months Ended		7 Months Ended	9 Months Ended
	Mar. 09, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Sep. 30, 2018
Business Acquisition [Line Items]
Payments to Acquire Investments				$ 0	$ 10
Payments to Acquire Investments		$ 10			$ 10
Investment Interest Rate					8.00%
Common Stock, Terms of Conversion					0.273
Debt Securities, Available-for-sale		10			$ 10
Goodwill		2,105			2,105	$ 2,764
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)					2
Revenue		717	$ 692	1,512	2,164
Operating income (loss)		(613)	$ (49)	$ (136)	(525)
Spoken
Business Acquisition [Line Items]
Purchase price	$ 172
Cash considerations	157
Contingent consideration	14	$ 5			5
Net payable to company in settlement of contingent consideration	1
Goodwill	117
Net liabilities acquired	9
Fair value of intangible assets acquired	$ 64
Revenue					8
Operating income (loss)					(21)
Estimate of Fair Value Measurement | Spoken
Business Acquisition [Line Items]
Performance targets	3
Former Owners and Employees | Spoken
Business Acquisition [Line Items]
Contingent consideration	$ 16
Business Combination, Contingent Consideration, Payment					11
Spoken Employees | Spoken
Business Acquisition [Line Items]
Contingent consideration	4
Business Combination, Contingent Consideration, Payment					$ 2
Technology-Based Intangible Assets | Spoken
Business Acquisition [Line Items]
Acquired intangible assets	56
In Process Research and Development | Spoken
Business Acquisition [Line Items]
Acquired intangible assets	$ 3
Maximum | Technology-Based Intangible Assets | Spoken
Business Acquisition [Line Items]
Acquired intangible assets, weighted average useful life	4 years 11 months
In Process Research and Development | Spoken
Business Acquisition [Line Items]
Acquired intangible assets	$ 5
Acquired intangible assets, weighted average useful life					5 years
Customer relationships and other intangibles | Spoken
Business Acquisition [Line Items]
Acquired intangible assets	$ 3
Acquired intangible assets, weighted average useful life	7 years 6 months

XML

Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Millions	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2018
Goodwill [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill)	$ 335
Goodwill [Roll Forward]
Goodwill, Beginning Balance	2,764
Impairment loss	(657)
Goodwill, Other Increase (Decrease)	2
Goodwill, Ending Balance	2,105
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss	(2)
Indefinite-Lived Intangible Assets (Excluding Goodwill And Accumulated Impairment)	333	$ 337
Intangible assets, net	2,978	3,234
Products & Solutions
Goodwill [Roll Forward]
Goodwill, Beginning Balance	1,283
Impairment loss	(657)
Goodwill, Other Increase (Decrease)	0
Goodwill, Ending Balance	626
Services
Goodwill [Roll Forward]
Goodwill, Beginning Balance	1,481
Impairment loss	0
Goodwill, Other Increase (Decrease)	2
Goodwill, Ending Balance	1,479
Acquired Technology and Patents [Member]
Goodwill [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill)	2
Goodwill [Roll Forward]
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss	(2)
Indefinite-Lived Intangible Assets (Excluding Goodwill And Accumulated Impairment)	0	5
Customer relationships and other intangibles
Goodwill [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill)	0
Goodwill [Roll Forward]
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss	0
Indefinite-Lived Intangible Assets (Excluding Goodwill And Accumulated Impairment)	0	0
Trademarks and Trade Names [Member]
Goodwill [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill)	333
Goodwill [Roll Forward]
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss	0
Indefinite-Lived Intangible Assets (Excluding Goodwill And Accumulated Impairment)	333	332
Trademarks and Trade Names [Member]
Goodwill [Roll Forward]
Intangible assets, net	366	372
Customer relationships and other intangibles
Goodwill [Roll Forward]
Intangible assets, net	1,916	2,033
Acquired Technology and Patents [Member]
Goodwill [Roll Forward]
Intangible assets, net	$ 696	$ 829

XML

Goodwill - Narrative (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Sep. 30, 2018
Goodwill [Line Items]
Asset Impairment Charges		$ 659	$ 0	$ 0	$ 659
Goodwill		$ 2,105			$ 2,105	$ 2,764
Goodwill, measurement input		6500.00%			6500.00%
Fair value in excess of carrying amount, percent		0.00%			0.00%
Impairment loss					$ (657)
Goodwill, Decrease In Discount Rate Resulting In An Estimated Fair Value Below The Carrying Value		9500.00%			9500.00%
Products & Solutions
Goodwill [Line Items]
Goodwill		$ 626			$ 626	1,283
Impairment loss					(657)
Services
Goodwill [Line Items]
Goodwill		1,479			1,479	$ 1,481
Impairment loss					0
Predecessor
Goodwill [Line Items]
Asset Impairment Charges	$ 0
Global Support Services [Member]
Goodwill [Line Items]
Goodwill		1,446			1,446
Contact Center Solutions [Member]
Goodwill [Line Items]
Goodwill		$ 197			197
Impairment loss					$ (657)

XML

Supplementary Financial Information - Consolidated Statements of Operations Information (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
OTHER INCOME (EXPENSE), NET
Interest income		$ 4	$ 1	$ 2	$ 11
Foreign currency (losses) gains, net		(1)	25	24	(8)
Income from transition services agreement, net		0	1	5	0
Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component		1	4	9	5
Change in fair value of emergence date warrants		7	6	(9)	28
Other, net		1	0	1	(1)
Total other income (expense), net		$ 12	$ 37	$ 32	$ 35
Predecessor
OTHER INCOME (EXPENSE), NET
Interest income	$ 2
Foreign currency (losses) gains, net	0
Income from transition services agreement, net	3
Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component	(8)
Change in fair value of emergence date warrants	0
Other, net	1
Total other income (expense), net	$ (2)

XML

Supplementary Financial Information - Reorganization Items (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Supplementary Financial Information [Line Items]
Net gain on settlement of Liabilities subject to compromise				$ 0	$ 0
Net gain on fresh start adjustments				0	0
Reorganization items, net		$ 0	$ 0	$ 0	$ 0
Predecessor
Supplementary Financial Information [Line Items]
Net gain on settlement of Liabilities subject to compromise	$ 1,778
Net gain on fresh start adjustments	1,697
Bankruptcy-related professional fees	(56)
Other items, net	(3)
Reorganization items, net	3,416
Cash payments for reorganization items	2,524
Claims paid	2,468
Payments for emergence and success fees	$ 56

XML

Supplementary Financial Information - Supplementary Cash Flow Information (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Other Significant Noncash Transactions [Line Items]
Restricted Cash, Current	$ 65	$ 0	$ 10	$ 10	$ 0	$ 0	$ 85
Restricted Cash, Noncurrent	4	5	4	4	5	4	5
Cash	366	729	685	685	729	700	876
OTHER PAYMENTS
Interest payments		61	52	99	160
Income tax payments		13	8	17	48
NON-CASH INVESTING ACTIVITIES
Increase (decrease) in Accounts payable for Capital expenditures		(6)	5	5	(1)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	435	$ 734	$ 699	$ 699	$ 734	$ 704	966
Predecessor
OTHER PAYMENTS
Interest payments	15
Income tax payments	7
NON-CASH INVESTING ACTIVITIES
Increase (decrease) in Accounts payable for Capital expenditures	0
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	$ 435						$ 966

XML

Business Restructuring Reserves and Programs (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		$ 1	$ 30	$ 80	$ 12
Restructuring Reserve [Roll Forward]
Cash payments					(5)
Impact of foreign currency fluctuations					1
Restructuring Reserve, ending balance		6			6
Fiscal 2018 Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Accrual Adjustment					1
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance					54
Cash payments					(15)
Impact of foreign currency fluctuations					(1)
Restructuring Reserve, ending balance		37			37
Fiscal 2019 Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges					12
Fiscal 2008-2015 Restructuring Programs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Accrual Adjustment					(1)
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance					44
Cash payments					(14)
Impact of foreign currency fluctuations					(1)
Restructuring Reserve, ending balance		30			30
Employee Separation Costs | Fiscal 2018 Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Accrual Adjustment					1
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance					54
Cash payments					(15)
Impact of foreign currency fluctuations					(1)
Restructuring Reserve, ending balance		37			37
Employee Separation Costs | Fiscal 2019 Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges					10
Restructuring Reserve [Roll Forward]
Cash payments					(5)
Impact of foreign currency fluctuations					1
Restructuring Reserve, ending balance		4			4
Employee Separation Costs | Fiscal 2008-2015 Restructuring Programs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Accrual Adjustment					(1)
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance					38
Cash payments					(12)
Impact of foreign currency fluctuations					(1)
Restructuring Reserve, ending balance		26			26
Lease Obligations | Fiscal 2018 Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Accrual Adjustment					0
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance					0
Cash payments					0
Impact of foreign currency fluctuations					0
Restructuring Reserve, ending balance		0			0
Lease Obligations | Fiscal 2019 Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges					2
Restructuring Reserve [Roll Forward]
Cash payments					0
Impact of foreign currency fluctuations					0
Restructuring Reserve, ending balance		2			2
Lease Obligations | Fiscal 2008-2015 Restructuring Programs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Accrual Adjustment					0
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance					6
Cash payments					(2)
Impact of foreign currency fluctuations					0
Restructuring Reserve, ending balance		$ 4			$ 4
Predecessor
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 14

XML

Financing Arrangements - Schedule of Debt (Details) - USD ($)	Jun. 30, 2019	Sep. 30, 2018	Jun. 11, 2018
Debt Instrument [Line Items]
Principal	$ 3,231,000,000	$ 3,253,000,000
Net of discounts and issuance costs	3,120,000,000	3,126,000,000
Debt maturing within one year	(29,000,000)	(29,000,000)
Long-term debt, net of current portion	3,091,000,000	3,097,000,000
Term Loan Credit Agreement due December 15, 2024
Debt Instrument [Line Items]
Principal	2,881,000,000	2,903,000,000
Net of discounts and issuance costs	2,852,000,000	2,870,000,000
Convertible 2.25% senior notes due June 15, 2023
Debt Instrument [Line Items]
Principal	350,000,000	350,000,000	$ 350,000,000
Net of discounts and issuance costs	$ 268,000,000	$ 256,000,000

XML

Financing Arrangements - Narrative (Details) - USD ($)			2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended	10 Months Ended
	Jun. 18, 2018	Dec. 15, 2017	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Sep. 30, 2018	Jun. 11, 2018
Debt Instrument [Line Items]
Debt face amount				$ 3,231,000,000			$ 3,231,000,000	$ 3,253,000,000
Weighted average contractual interest rate of debt				6.50%			6.50%	6.40%
Amortization of debt issuance costs				$ 4,000,000		$ 1,000,000	$ 12,000,000
Term Loan
Debt Instrument [Line Items]
Debt face amount				2,881,000,000			2,881,000,000	$ 2,903,000,000
Interest expense on debt				51,000,000	$ 50,000,000	$ 106,000,000	151,000,000
Term Loan | Term Loan Credit Agreement due December 15, 2024
Debt Instrument [Line Items]
Debt face amount		$ 2,925,000,000	$ 2,925,000,000
Term Loan | Revolving Credit Facility | LIBOR Loans | Floor | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	0.00%	1.00%
Line of Credit | Revolving Credit Facility | ABL Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, current borrowing capacity		$ 300,000,000	300,000,000
Line of Credit | Letter of Credit | ABL Credit Agreement
Debt Instrument [Line Items]
Letters of credit, maximum amount		$ 150,000,000	150,000,000
Letters of credit outstanding				45,000,000			45,000,000
Letter of credit, remaining borrowing capacity				139,000,000			139,000,000
Debt Related Commitment Fees and Debt Issuance Costs							1,000,000
Convertible Notes
Debt Instrument [Line Items]
Debt face amount				350,000,000			350,000,000	350,000,000	$ 350,000,000
Interest rate, stated percentage									2.25%
Interest expense on debt				$ 6,000,000			$ 18,000,000	1,000,000
Effective interest rate				9.20%			9.20%
Over-Allotment Option | Convertible Notes
Debt Instrument [Line Items]
Debt face amount									$ 50,000,000
Other liabilities
Debt Instrument [Line Items]
Capital lease obligations				$ 20,000,000			$ 20,000,000	31,000,000
Sale Lease Back Transaction [Member] | Avaya Private Cloud Services Business | Other liabilities
Debt Instrument [Line Items]
Capital lease obligations				$ 16,000,000			$ 16,000,000	$ 26,000,000
Predecessor [Member]
Debt Instrument [Line Items]
Contractual Interest Expense on Prepetition Liabilities Not Recognized in Statement of Operations			94,000,000
Amortization of debt issuance costs			$ 0

XML

Financing Arrangements - Carrying Amount of Convertible Debt (Details) - USD ($)	Jun. 30, 2019	Sep. 30, 2018	Jun. 11, 2018
Debt Instrument [Line Items]
Principal	$ 3,231,000,000	$ 3,253,000,000
Convertible Notes
Debt Instrument [Line Items]
Principal	350,000,000	350,000,000	$ 350,000,000
Less:
Unamortized debt discount	(76,000,000)	(87,000,000)
Unamortized issuance costs	(6,000,000)	(7,000,000)
Net carrying amount	$ 268,000,000	$ 256,000,000

XML

Derivative Instruments and Hedging Activities - Narrative (Details) $ / shares in Units, $ in Millions		9 Months Ended
	May 16, 2018 counterparty	Jun. 30, 2019 USD ($) agreement	Nov. 14, 2018 USD ($)	Dec. 15, 2017 $ / shares shares
Derivative [Line Items]
Number of counterparties | counterparty	6
Class of warrant or right, number of securities called by each warrant or right (in shares) | shares				5,645,200
Class of warrant or right, exercise price of warrants or rights (in USD per share) | $ / shares				$ 25.55
Warrant Repurchase Program, Number of Securities Called by Warrants or Rights, Authorized Amount			$ 15
Warrant Repurchase Program, Number of Securities Called by Warrants or Rights, Number of Warrants Repurchased		$ 0
Interest rate contracts
Derivative [Line Items]
Derivative fixed interest rate	2.935%
Number of instruments held (agreement) | agreement		6
Derivative notional amount		$ 1,800
Expected gain (loss) to be reclassified within twelve months		20
Foreign Exchange Contract [Member]
Derivative [Line Items]
Derivative notional amount		$ 355

XML

Derivative Instruments and Hedging Activities - Assumptions Used (Details)	Jun. 30, 2019 year $ / shares	Sep. 30, 2018 year $ / shares
Expected volatility
Derivative [Line Items]
Warrants, measurement input	0.5756	0.5014
Risk-free interest rates
Derivative [Line Items]
Warrants, measurement input	0.0171	0.0290
Contractual remaining life (in years)
Derivative [Line Items]
Warrants, measurement input | year	3.46	4.21
Warrants
Derivative [Line Items]
Price per share of common stock (in usd per share) | $ / shares	$ 11.91	$ 22.14

XML

Derivative Instruments and Hedging Activities - Fair Value (Details) - USD ($) $ in Millions	Jun. 30, 2019	Sep. 30, 2018
Derivative [Line Items]
Derivative Asset	$ 2	$ 3
Derivative Liability	81
Derivatives Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Asset	0
Derivative Liability	75
Derivatives Designated as Hedging Instruments: | Other assets | Interest rate contracts
Derivative [Line Items]
Derivative Asset	0	3
Derivative Liability	0	0
Derivatives Designated as Hedging Instruments: | Other current liabilities | Interest rate contracts
Derivative [Line Items]
Derivative Asset	0	0
Derivative Liability	19	7
Derivatives Designated as Hedging Instruments: | Other liabilities | Interest rate contracts
Derivative [Line Items]
Derivative Asset	0	0
Derivative Liability	56	0
Derivatives Not Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Asset	2	0
Derivative Liability	6	34
Derivatives Not Designated as Hedging Instruments: | Other current liabilities | Foreign Exchange Contract [Member]
Derivative [Line Items]
Derivative Asset		0
Derivative Liability	0	0
Derivatives Not Designated as Hedging Instruments: | Other liabilities | Warrants
Derivative [Line Items]
Derivative Asset	0	0
Derivative Liability	6	34
Derivatives Not Designated as Hedging Instruments: | Other Current Assets [Member] | Foreign Exchange Contract [Member]
Derivative [Line Items]
Derivative Asset	$ 2
Predecessor | Derivatives Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Asset		3
Derivative Liability		$ 7

XML

Derivative Instruments and Hedging Activities - Derivatives Designated as Cash Flow Hedges (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended				7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Derivative [Line Items]
Interest expense		$ (59)			$ (56)	$ (112)	$ (177)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent		(38)	$ 8	$ (20)	(16)	(41)	(50)
Accumulated Other Comprehensive (Loss) Income
Derivative [Line Items]
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent		(38)	$ 8	$ (20)	(16)	(41)	(50)
Interest Expense [Member] | Derivatives Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Instruments, Loss Reclassified from Accumulated OCI into Income, Effective Portion		0			0	0	0
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net		(2)			(2)	(2)	(7)
Other Comprehensive Income (Loss) [Member] | Derivatives Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Instruments, Loss Reclassified from Accumulated OCI into Income, Effective Portion		(31)			(17)	(17)	(78)
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net		$ 2			$ 2	$ 2	$ 7
Predecessor [Member]
Derivative [Line Items]
Interest expense	$ (14)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	658
Predecessor [Member] | Accumulated Other Comprehensive (Loss) Income
Derivative [Line Items]
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	658
Predecessor [Member] | Interest Expense [Member] | Derivatives Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Instruments, Loss Reclassified from Accumulated OCI into Income, Effective Portion	0
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	0
Predecessor [Member] | Other Comprehensive Income (Loss) [Member] | Derivatives Designated as Hedging Instruments:
Derivative [Line Items]
Derivative Instruments, Loss Reclassified from Accumulated OCI into Income, Effective Portion	0
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	$ 0

XML

Derivative Instruments and Hedging Activities - Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Sep. 30, 2018
Derivative [Line Items]
Derivative Liability, Fair Value, Gross Liability		$ 81			$ 81
Predecessor
Derivative [Line Items]
Derivative Liability, Fair Value, Gross Liability						$ 41
Other income (expense), net | Derivatives Not Designated as Hedging Instruments: | Emergence Date Warrants
Derivative [Line Items]
Derivative, gain (loss)		7	$ 6	$ (9)	28
Other income (expense), net | Derivatives Not Designated as Hedging Instruments: | Foreign Exchange Forward [Member]
Derivative [Line Items]
Derivative, gain (loss)		$ (1)	$ 0	$ 0	$ (1)
Other income (expense), net | Predecessor | Derivatives Not Designated as Hedging Instruments: | Emergence Date Warrants
Derivative [Line Items]
Derivative, gain (loss)	$ 0
Other income (expense), net | Predecessor | Derivatives Not Designated as Hedging Instruments: | Foreign Exchange Forward [Member]
Derivative [Line Items]
Derivative, gain (loss)	$ 0

XML

Derivative Instruments and Hedging Activities - Presented on a Net Basis (Details) - USD ($) $ in Millions	Jun. 30, 2019	Sep. 30, 2018
Derivative [Line Items]
Gross amounts recognized in the consolidated balance sheet, Asset	$ 2	$ 3
Gross amounts recognized in the consolidated balance sheet, Liability	81
Gross amount subject to offset in master netting arrangements not offset in the Consolidated Balance Sheet, Asset	(2)	(3)
Gross amount subject to offset in master netting arrangements not offset in the Consolidated Balance Sheet, Liability	(2)	(3)
Derivative Asset	0
Derivative Liability	$ 79
Predecessor
Derivative [Line Items]
Gross amounts recognized in the consolidated balance sheet, Liability		41
Derivative Asset		0
Derivative Liability		$ 38

XML

Intangible Assets (Details) - USD ($) $ in Millions	Jun. 30, 2019	Sep. 30, 2018
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Cost	$ 3,159	$ 3,159
Accumulated amortization	(514)	(262)
Finite-lived intangible assets, net	2,645	2,897
Indefinite-lived intangible assets, net	333	337
Intangible assets, net	2,978	3,234
Acquired technology and patents
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Cost	961	959
Accumulated amortization	(265)	(135)
Finite-lived intangible assets, net	696	824
Customer relationships and other intangibles
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Cost	2,156	2,157
Accumulated amortization	(240)	(124)
Finite-lived intangible assets, net	1,916	2,033
Trademarks and trade names
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Cost	42	43
Accumulated amortization	(9)	(3)
Finite-lived intangible assets, net	33	40
Acquired technology and patents
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets, net	0	5
Customer relationships and other intangibles
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets, net	0	0
Trademarks and trade names
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets, net	333	332
Trademarks and trade names
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net	366	372
Customer relationships and other intangibles
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net	1,916	2,033
Acquired technology and patents
Finite-lived and Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net	$ 696	$ 829

XML

Intangible Assets - Narrative (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Asset Impairment Charges		$ 659	$ 0	$ 0	$ 659
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss		2			2
Predecessor
Finite-Lived Intangible Assets [Line Items]
Asset Impairment Charges	$ 0
Acquired Technology and Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss		2			2
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill), Accumulated Impairment Loss		$ 0			$ 0

XML

Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Recurring - USD ($) $ in Millions	Jun. 30, 2019	Sep. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 12	$ 5
Liabilities	86	56
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	2
Liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	2	3
Liabilities	75	7
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	10	0
Liabilities	11	49
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	10	0
Corporate Debt Securities [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Corporate Debt Securities [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Corporate Debt Securities [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	10	0
Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	2
Investments | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	2
Investments | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Investments | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Interest rate contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	3
Liabilities	75	7
Interest rate contracts | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	0	0
Interest rate contracts | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	3
Liabilities	75	7
Interest rate contracts | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	0	0
Spoken acquisition Earn-outs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	5	15
Spoken acquisition Earn-outs | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Spoken acquisition Earn-outs | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Spoken acquisition Earn-outs | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities		15
Foreign currency forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	2	0
Foreign currency forward contracts | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Foreign currency forward contracts | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	2	0
Foreign currency forward contracts | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Emergence Date Warrants | Foreign currency forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	6	34
Emergence Date Warrants | Foreign currency forward contracts | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Emergence Date Warrants | Foreign currency forward contracts | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Emergence Date Warrants | Foreign currency forward contracts | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	$ 6	$ 34

XML

Fair Value Measurements - Level 3 Liabilities Measured at Fair Value on a Recurring Basis (Details) - Level 3 $ in Millions	9 Months Ended
	Jun. 30, 2019 USD ($)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Purchases	$ 10
Fair value of derivative liability, beginning balance	49
Change in fair value	(27)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements	11
Fair value of derivative liability, ending balance	21
Emergence Date Warrants
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Purchases	0
Fair value of derivative liability, beginning balance	34
Change in fair value	(28)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements	0
Fair value of derivative liability, ending balance	6
Spoken acquisition Earn-outs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Purchases	0
Fair value of derivative liability, beginning balance	15
Change in fair value	1
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements	11
Fair value of derivative liability, ending balance	5
Investments [Domain]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Purchases	10
Fair value of derivative liability, beginning balance	0
Change in fair value	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements	0
Fair value of derivative liability, ending balance	$ 10

XML

Fair Value Measurements - Fair Value of Financial Instruments (Details) - USD ($)	Jun. 30, 2019	Sep. 30, 2018	Jun. 11, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt face amount	$ 3,231,000,000	$ 3,253,000,000
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	3,069,000,000	3,289,000,000
Term Loan Credit Agreement due December 15, 2024
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt face amount	2,881,000,000	2,903,000,000
Term Loan Credit Agreement due December 15, 2024 | Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	2,764,000,000	2,932,000,000
Convertible 2.25% senior notes due June 15, 2023
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt face amount	350,000,000	350,000,000	$ 350,000,000
Convertible 2.25% senior notes due June 15, 2023 | Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	$ 305,000,000	$ 357,000,000

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Income Taxes - Income Taxes Narrative (Details) - USD ($) $ in Billions	2 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019
Revenue, Remaining Performance Obligation, Amount		$ 2.7
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%
Predecessor [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	35.00%

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Benefit Obligations - Narrative (Details) $ in Millions	9 Months Ended
	Jun. 30, 2019 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Accumulated Benefit Obligation, Increase (Decrease) for Plan Amendment	$ 8
Post-retirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Contributions by employer	11
Reimbursement of prior period payments	(3)
U.S. | Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Estimated future employer contributions in current fiscal year	5
U.S. | Postretirement Health Coverage
Defined Benefit Plan Disclosure [Line Items]
Estimated future employer contributions in current fiscal year	3
Non-US
Defined Benefit Plan Disclosure [Line Items]
Contributions by employer	19
Non-US | Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Estimated future employer contributions in current fiscal year	6
Not Pre-Funded | U.S.
Defined Benefit Plan Disclosure [Line Items]
Contributions by employer	$ 22

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Benefit Obligations - Components of the Pension and Post-Retirement Net Periodic Benefit Cost (Credit) (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
U.S. | Pension Plan
Components of net periodic benefit (credit) cost
Service cost		$ 1	$ 1	$ 2	$ 3
Interest cost		10	9	19	29
Expected return on plan assets		(15)	(17)	(35)	(45)
Amortization of actuarial loss		0	0	0	0
Net periodic benefit cost (credit)		(4)	(7)	(14)	(13)
U.S. | Pension Plan | Predecessor
Components of net periodic benefit (credit) cost
Service cost	$ 1
Interest cost	22
Expected return on plan assets	(38)
Amortization of actuarial loss	20
Net periodic benefit cost (credit)	5
U.S. | Post-retirement Benefits
Components of net periodic benefit (credit) cost
Service cost		0	1	1	1
Interest cost		4	4	7	11
Expected return on plan assets		(2)	(3)	(5)	(7)
Amortization of prior service cost		0	0	0	0
Amortization of actuarial loss		(1)	0	0	(1)
Net periodic benefit cost (credit)		1	2	3	4
U.S. | Post-retirement Benefits | Predecessor
Components of net periodic benefit (credit) cost
Service cost	0
Interest cost	3
Expected return on plan assets	(2)
Amortization of prior service cost	(3)
Amortization of actuarial loss	2
Net periodic benefit cost (credit)	0
Non-US | Pension Plan
Components of net periodic benefit (credit) cost
Service cost		2	1	3	5
Interest cost		2	3	5	7
Expected return on plan assets		0	0	0	0
Amortization of actuarial loss		0	0	0	0
Net periodic benefit cost (credit)		$ 4	$ 4	$ 8	$ 12
Non-US | Pension Plan | Predecessor
Components of net periodic benefit (credit) cost
Service cost	2
Interest cost	3
Expected return on plan assets	(1)
Amortization of actuarial loss	2
Net periodic benefit cost (credit)	$ 6

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Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 8	$ 7	$ 13	$ 19
Performance Shares [Member] | Director | 2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period					1 year
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					1,686,004
Grants in period, weighted average grant date fair value (in dollars per share)					$ 15.46
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period					1,484,659
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value					$ 15.49
Restricted stock units | 2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period					3 years
Market-Based Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					274,223
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate					53.76%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate					2.45%
Grants in period, weighted average grant date fair value (in dollars per share)					$ 11.18
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award					23.50
Performance-Based Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					182,020
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate					53.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate					2.46%
Predecessor
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accelerated compensation cost	$ 3

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Capital Stock - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	Jun. 30, 2019	Nov. 14, 2018	Sep. 30, 2018
Class of Stock [Line Items]
Preferred Stock, Shares Authorized	55,000,000
Preferred stock, par value (in usd per share)	$ 0.01
Preferred shares issued	0		0
Common stock, shares authorized	550,000,000		550,000,000
Common stock, par value (usd per share)	$ 0.01		$ 0.01
Common stock, shares issued	110,887,967		110,218,653
Common stock, shares outstanding	110,875,287		110,012,790
Common stock, issued for GUC (shares)	12,680		205,863
Warrant repurchase program, authorized amount		$ 15
Warrant Repurchase Program, Number of Securities Called by Warrants or Rights, Number of Warrants Repurchased	$ 0
As Previously Reported
Class of Stock [Line Items]
Common stock, shares issued	110,887,967		110,218,653

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Net Income (Loss) Per Common Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	2 Months Ended	3 Months Ended				7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Numerator
Net income (loss)		$ (633)	$ (13)	$ 9	$ (88)	$ 19	$ (637)
Dividends and accretion to preferred stockholders		0			0	0	0
Undistributed (loss) income		$ (633)			$ (88)	$ 19	$ (637)
Percentage allocated to common stockholders		100.00%			100.00%	100.00%	100.00%
Numerator for basic and diluted (loss) earnings per common share		$ (633)			$ (88)	$ 19	$ (637)
Weighted average shares outstanding
Denominator for basic earnings per weighted average common shares (in shares)		111.0			109.8	109.8	110.7
Effect of dilutive securities
Denominator for diluted earnings (loss) per weighted average common shares (in shares)		111.0			109.8	111.0	110.7
(Loss) earnings per common share
Basic (in usd per share)		$ (5.70)			$ (0.80)	$ 0.17	$ (5.75)
Diluted (in usd per share)		$ (5.70)			$ (0.80)	$ 0.17	$ (5.75)
Weighted average number of shares - basic (in shares)		111.0			109.8	109.8	110.7
Basic weighted average common stock and common stock equivalents (preferred shares) (in shares)		111.0			109.8	109.8	110.7
Restricted stock units
Effect of dilutive securities
Share-based payment arrangements (in shares)		0.0			0.0	1.2	0.0
Predecessor
Numerator
Net income (loss)	$ 2,977
Dividends and accretion to preferred stockholders	(6)
Undistributed (loss) income	$ 2,971
Percentage allocated to common stockholders	86.90%
Numerator for basic and diluted (loss) earnings per common share	$ 2,582
Weighted average shares outstanding
Denominator for basic earnings per weighted average common shares (in shares)	497.3
Effect of dilutive securities
Denominator for diluted earnings (loss) per weighted average common shares (in shares)	497.3
(Loss) earnings per common share
Basic (in usd per share)	$ 5.19
Diluted (in usd per share)	$ 5.19
Weighted average number of shares - basic (in shares)	497.3
Basic weighted average common stock and common stock equivalents (preferred shares) (in shares)	572.4
Predecessor | Restricted stock units
Effect of dilutive securities
Share-based payment arrangements (in shares)	0.0

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Net Income (Loss) Per Common Share - Narrative (Details) - $ / shares shares in Millions	3 Months Ended		7 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Jun. 11, 2018
Bond Hedge and Call Spread Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion price (in usd per share)	$ 37.3625			$ 37.3625
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1.0	1.1	1.1	1.0
Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0.5
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	3.6	3.3		3.9
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	5.6	5.6	5.6	5.6
Call Spread Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class of Warrant or Right, Outstanding					12.6

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Operating Segments - Summarized Financial Information of Operating Segments (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019	Sep. 30, 2018
Segment Reporting Information
REVENUE		$ 717	$ 692	$ 1,512	$ 2,164
GROSS PROFIT		390	352	753	1,183
OPERATING EXPENSES
Selling, general and administrative		253	281	613	761
Research and development		49	51	110	154
Amortization of intangible assets		41	39	86	122
Asset Impairment Charges		659	0	0	659
Restructuring charges, net		1	30	80	12
TOTAL OPERATING EXPENSES		1,003	401	889	1,708
OPERATING (LOSS) INCOME		(613)	(49)	(136)	(525)
INTEREST EXPENSE, OTHER INCOME (EXPENSE), NET AND REORGANIZATION ITEMS, NET		(47)	(19)	(80)	(142)
(LOSS) INCOME BEFORE INCOME TAXES		(660)	(68)	(216)	(667)
Total Assets		6,991			6,991	$ 7,679
Products & Solutions
Segment Reporting Information
REVENUE		298			913
Services
Segment Reporting Information
REVENUE		422			1,269
Operating Segments | Products & Solutions
Segment Reporting Information
REVENUE		298	322	716	913
GROSS PROFIT		189	210	473	587
Operating Segments | Services
Segment Reporting Information
REVENUE		422	433	967	1,269
GROSS PROFIT		249	257	582	759
Unallocated
Segment Reporting Information
REVENUE		(3)	(63)	(171)	(18)
GROSS PROFIT		$ (48)	$ (115)	$ (302)	$ (163)
Predecessor
Segment Reporting Information
REVENUE	$ 604
GROSS PROFIT	362
OPERATING EXPENSES
Selling, general and administrative	264
Research and development	38
Amortization of intangible assets	10
Asset Impairment Charges	0
Restructuring charges, net	14
TOTAL OPERATING EXPENSES	326
OPERATING (LOSS) INCOME	36
INTEREST EXPENSE, OTHER INCOME (EXPENSE), NET AND REORGANIZATION ITEMS, NET	3,400
(LOSS) INCOME BEFORE INCOME TAXES	3,436
Predecessor | Operating Segments | Products & Solutions
Segment Reporting Information
REVENUE	253
GROSS PROFIT	169
Predecessor | Operating Segments | Services
Segment Reporting Information
REVENUE	351
GROSS PROFIT	196
Predecessor | Unallocated
Segment Reporting Information
REVENUE	0
GROSS PROFIT	$ (3)

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Accumulated Other Comprehensive (Loss) Income - Components (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Dec. 15, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2019
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance		$ 2,135		$ 1,668	$ 2,051
Other comprehensive income (loss) before reclassifications		(49)	$ (21)	(46)	(77)
Amounts reclassified to earnings		2	2	2	7
(Provision for) benefit from income taxes		(9)	(3)	(3)	(20)
Ending Balance	$ 1,668	1,470	1,718	1,718	1,470
Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance		51	0	0	51
Other comprehensive income (loss) before reclassifications		(8)	0	0	(8)
Amounts reclassified to earnings		0	0	0	0
(Provision for) benefit from income taxes		(2)	0	0	(2)
Ending Balance	0	45	0	0	45
Foreign Currency Translation
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance		(12)	(25)	0	(31)
Other comprehensive income (loss) before reclassifications		(10)	(4)	(29)	9
Amounts reclassified to earnings		0	0	0	0
(Provision for) benefit from income taxes		0	0	0	0
Ending Balance	0	(22)	(29)	(29)	(22)
Unrealized Loss on Term Loan Interest Rate Swap
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance		(33)	0	0	(2)
Other comprehensive income (loss) before reclassifications		(31)	(17)	(17)	(78)
Amounts reclassified to earnings		2	2	2	7
(Provision for) benefit from income taxes		(7)	(3)	(3)	(18)
Ending Balance	0	(55)	(12)	(12)	(55)
Other
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance		0	0	0	0
Other comprehensive income (loss) before reclassifications		0	0	0	0
Amounts reclassified to earnings		0	0	0	0
(Provision for) benefit from income taxes		0	0	0	0
Ending Balance	0	0	0	0	0
Accumulated Other Comprehensive (Loss) Income
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance		6	(25)	0	18
Ending Balance	0	$ (32)	$ (41)	(41)	$ (32)
Predecessor
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(5,013)			1,668
Other comprehensive income (loss) before reclassifications	(21)
Amounts reclassified to earnings	16
Pension settlement	721
(Provision for) benefit from income taxes	(58)
Ending Balance	1,668
Predecessor | Eliminations
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance				790
Ending Balance	790
Predecessor | Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(1,375)			0
Other comprehensive income (loss) before reclassifications	(24)
Amounts reclassified to earnings	16
Pension settlement	721
(Provision for) benefit from income taxes	(58)
Ending Balance	0
Stockholders' Equity Attributable to Parent, Before Elimination Of Predecessor Company Accumulated Other Comprehensive Loss	(720)
Predecessor | Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items | Eliminations
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance				720
Ending Balance	720
Predecessor | Foreign Currency Translation
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(72)			0
Other comprehensive income (loss) before reclassifications	3
Amounts reclassified to earnings	0
(Provision for) benefit from income taxes	0
Ending Balance	0
Stockholders' Equity Attributable to Parent, Before Elimination Of Predecessor Company Accumulated Other Comprehensive Loss	(69)
Predecessor | Foreign Currency Translation | Eliminations
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance				69
Ending Balance	69
Predecessor | Unrealized Loss on Term Loan Interest Rate Swap
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	0			0
Other comprehensive income (loss) before reclassifications	0
Amounts reclassified to earnings	0
(Provision for) benefit from income taxes	0
Ending Balance	0
Stockholders' Equity Attributable to Parent, Before Elimination Of Predecessor Company Accumulated Other Comprehensive Loss	0
Predecessor | Unrealized Loss on Term Loan Interest Rate Swap | Eliminations
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance				0
Ending Balance	0
Predecessor | Other
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(1)			0
Other comprehensive income (loss) before reclassifications	0
Amounts reclassified to earnings	0
(Provision for) benefit from income taxes	0
Ending Balance	0
Stockholders' Equity Attributable to Parent, Before Elimination Of Predecessor Company Accumulated Other Comprehensive Loss	(1)
Predecessor | Other | Eliminations
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance				1
Ending Balance	1
Predecessor | Accumulated Other Comprehensive (Loss) Income
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(1,448)			$ 0
Ending Balance	0
Stockholders' Equity Attributable to Parent, Before Elimination Of Predecessor Company Accumulated Other Comprehensive Loss	$ (790)

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Related Party Transactions (Details) $ in Millions	2 Months Ended	7 Months Ended	9 Months Ended
	Dec. 15, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) director	Sep. 30, 2018 USD ($)
Related Party Transaction [Line Items]
Number of directors | director			7
Flex Ltd | Affiliated Entity
Related Party Transaction [Line Items]
Accounts payable, related parties			$ 18	$ 4
Flex Ltd | Purchased Goods And Services From Flex Ltd. | Board of Directors Chairman
Related Party Transaction [Line Items]
Cost of goods and services sold		$ 13	$ 22
Flex Ltd | Predecessor | Purchased Goods And Services From Flex Ltd. | Board of Directors Chairman
Related Party Transaction [Line Items]
Cost of goods and services sold	$ 6
Non-Employee Director
Related Party Transaction [Line Items]
Number of directors | director			6

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Commitments and Contingencies - General (Details) $ in Millions	2 Months Ended
	Dec. 15, 2017 USD ($)
Predecessor
Loss Contingencies [Line Items]
Legal costs	$ 37

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Commitments and Contingencies - Intellectual Property and Commercial Disputes (Details) $ in Thousands	Jun. 12, 2018 USD ($)
Misappropriations Claim
Loss Contingencies [Line Items]
Estimated litigation liability	$ 1,210
Fraud Claim
Loss Contingencies [Line Items]
Estimated litigation liability	$ 0

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Commitments and Contingencies - Product Warranties (Details) - USD ($) $ in Millions	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Product warranties, maximum term	2 years
Amount reserved for product warranties	$ 1	$ 2

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Commitments and Contingencies - Letters of Credit and Guarantees (Details) $ in Millions	Jun. 30, 2019 USD ($)
Line of Credit Facility [Line Items]
Restricted cash	$ 4
Standby Letters of Credit
Line of Credit Facility [Line Items]
Letters of credit, maximum amount	$ 70

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Commitments and Contingencies - Transactions with Nokia (Details) $ in Millions	9 Months Ended
	Jun. 30, 2019 USD ($)
Indemnification Agreement
Loss Contingencies [Line Items]
Threshold amount of contribution and distribution agreement	$ 50